Understanding Taxes for Native English Teachers in Korea
When working in Korea, you might notice that the salary you receive is lower than your expected salary. For example, you were supposed to receive 2.4 million Korean won this month, but only 2.2 million Korean won was deposited.
This difference is often due to tax deductions or social insurance contributions. Understanding these systems is crucial for understanding your salary and maximizing your benefits.
Why & What Taxes are Paid by Teachers
Native English teachers working in Korea typically pay income tax on their earnings. Taxes are withheld monthly from your paycheck by your school and contribute toward national tax obligations. Apart from income tax, teachers might also pay local taxes depending on their residence. Understanding your tax responsibilities is vital to avoid surprises.
Korea's 4 Major Social Insurances
Korea’s 4 major social insurances refer to four types of social security programs designed to protect and support workers in Korea.
1. National Pension: Public pension plan for financial support after retirement (65 years old).
- Teacher contribution: 4.5% (monthly salary)
- School contribution: 4.5%
2. Health Insurance & Long-term care Insurance: A national health insurance plan covers essential medical expenses, checks, reducing healthcare costs.
- Teacher contribution: 3.99% (monthly salary)
- School contribution: 3.99%
3. Employment Insurance : Employment or unemployment insurance provides unemployment benefits if you lose your job.
- Teacher contribution: 0.9% (monthly salary)
- School contribution: 1.15%
4. Worker’s Compensation Insurance: Workers’ compensation or industrial insurance covers medical expenses and compensation for injuries or illnesses caused by work.
- School contribution: 0.96% (fully paid)
9.39% of your monthly salary
How to Calculate Your Income After Tax
1. Visit the Four Insurance Calculator Page (click here)
| Please note: The results from this calculator are estimates and may differ from the actual figures. However, if your pay is drastically different from estimates, please check with your school. |
2. Type your monthly salary in the box after monthly salary ('월 급여') and click calculate ('계산').
3. The total 'Employee Contribution' should be listed in the bottom row of the second column. Subtract that amount from your monthly salary. That is your income after your total social insurance contributions.
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Sample Calculation If your monthly salary is 2,500,000 KRW (2.5 million Korean won), your total social insurance contributions would be 235,090 KRW. After these deductions, your take-home pay would be 2,264,910 KRW. |
3.3% Withholding Tax: For Freelancers and Contract Workers
The 3.3% withholding tax applies when you are classified as a freelancer or independent contractor. This means taxes are deducted before you receive your salary. F-visa holders can typically sign as independent contractors, if the option is available.
What is included in the 3.3%?
- 3% local income tax
- 0.3% national income tax
Advantages of the 3.3% System
- If your total income is relatively low, you can file a comprehensive income tax return in May and potentially receive a refund.
- This system provides more flexibility in employment since you are not bound to a company’s social insurance requirements.
Things to Be Aware Of
- You are responsible for reporting and paying taxes on your income if you earn from multiple sources.
- No social insurance benefits (such as medical insurance or unemployment benefits) are provided under this system.
Your choice between the 3.3% withholding tax and the 4 major insurances depends on your work situation:
- Short-term or Flexible Work: The 3.3% tax system is suitable for freelancers or short-term workers.
- Advantage: Easier to manage with fewer deductions.
- Drawback: No access to social insurance benefits.
- Long-term Employment: The 4 major insurances are ideal for employees in regular positions.
- Advantage: Provides a strong safety net through various social benefits.
- Drawback: Higher deductions from your salary (approximately 10.1%).
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As former native English teachers in Korea, we know exactly what it’s like to navigate teaching abroad—the excitement, the challenges, and everything in between. That’s why we’re committed to increasing transparency in schools, protecting teachers’ rights, and helping improve Korea’s ESL teaching industry. At Embark Recruiting, we provide full support to help you succeed, whether it’s finding a reputable school, understanding your contract, or adjusting to life in Korea. Our blog is your go-to resource for guidance, tips, and insider knowledge every step of the way.