What the 3.3% is and where it comes from

What the 3.3% is

When you do freelance work in Korea and invoice for it, the amount written on the contract is not the amount that arrives. The party that hired you takes 3.3% first, remits it to the state on your behalf, and pays you the rest. This is called withholding, and the party taking it is the withholding agent.

The 3.3% is not one thing but two. 3% of the contract amount is income tax, and 10% of that income tax is local income tax. The statute charges the second one on the income tax, not on the contract amount. With both figures rounded down to ten won that lands on the same number as a flat 0.3% of the contract, which is not a coincidence: the two rates are exactly a factor of ten apart, and test/withholding locks that property. It does part ways with anyone who rounds to the nearest unit or pays to the single won.

Having it taken looks like a loss, but it is not extra tax. That money is paid in your name, and when you file your annual income tax return the following year it counts as tax already paid. If more was withheld than you actually owe, you get the difference back. If less, you pay the rest.

The rules the statutes set

Who withholds is set by article 127(1)3 of the Income Tax Act. A business paying a resident business income of the kind prescribed by Presidential Decree must withhold income tax on it. Two conditions sit in that sentence: the payer must be a business, and the income must be business income subject to withholding.

Which business income that is comes from article 184(1) of the Enforcement Decree, which points at article 26(1)5 and 26(1)15 of the Value Added Tax Act. In practice this covers personal services: lecturing, writing, design, translation and similar work an individual performs in person.

The rate is article 129(1)3 of the Income Tax Act: business income subject to withholding is taxed at 3 out of 100, that is 3%. The proviso in the same subparagraph sets 20 out of 100 for foreign professional athletes contracted to a professional sports club, and this calculator does not handle that case.

Local income tax comes from article 103-13(1) of the Local Tax Act. When a withholding agent withholds income tax, it must at the same time collect 10 out of 100 of that income tax as individual local income tax. 10% of 3% is 0.3%, and the two together are the 3.3% everyone quotes.

What this calculator does

This section describes what the code actually does, in order. Given a contract amount it first works out income tax: multiply by 3% and round down to the nearest 10 won. Then local income tax: multiply that income tax by 10% and round down to the nearest 10 won again. The two added together are the total withheld, and the contract amount minus that is your take-home.

The rounding follows article 47 of the National Treasury Funds Management Act. Paragraph 1 says fractions below 10 won in treasury receipts and payments are not counted, and paragraph 3 says local governments may apply the same rule. Paragraph 3 says may, so the local income tax side is practice rather than a hard command, and we say so. Rounding down means the screen never overstates what is taken from you.

Working backwards from a take-home figure is not a single division. Because each tax figure is rounded down, take-home moves in steps as the contract amount rises, and roughly every 333 won there is a point where one more won of contract leaves a few won less in hand. So we divide to land in the neighbourhood, then walk that neighbourhood one won at a time and pick the smallest contract amount that produces the take-home you asked for. If nothing lands exactly, we show the smallest amount that clears it and say so, because rounding the other way would leave you actually short.

The side-by-side screen feeds the same monthly amount to two formulas. The freelancer side is the one above. The employee side deducts four insurances, looks up income tax in the monthly withholding table, and adds 10% of that as local income tax. That employee formula and its rates were taken, source comments and all, from our sister app, the Korea take-home pay calculator, so both apps produce the same figures. The comparison sets the tax-free meal allowance to zero. An employee whose company pays a separate meal allowance instead of providing meals has up to ₩200,000 a month exempt from tax and insurance, but a freelance contract has no such line, so it has to come out for the two sides to be measured the same way.

These are the employee side rates. National pension is 9.5% of the standard monthly income, split evenly, so the worker pays 4.75%. That standard income is rounded down to the nearest thousand won and clamped between ₩410,000 and ₩6,590,000, a band that applies from 2026-07-01 to 2027-06-30. Health insurance is 7.19% of monthly remuneration, split evenly, so the worker pays 3.595%, and the monthly premium is capped at ₩9,183,480 and floored at ₩20,160 on the combined basis. Long-term care insurance is the health premium multiplied by 0.9448% divided by 7.19%, and employment insurance is 0.9% for the unemployment benefit share.

Employee income tax comes from the monthly withholding table. The current table was revised on 2026-02-27 and applies to payments from 2026-03-01, and you find the cell from monthly taxable pay and the number of dependents. If there are children aged 8 to 20, the table amount is reduced by ₩20,830 for one child, ₩45,830 for two, and a further ₩33,330 for each child after that. The freelancer side has no such table. It is 3.3% whatever the family size.

Copying the result link only appends the numbers you entered to the address. Nothing is stored on a server, and opening the link runs the same calculation again in that person's browser.

Filling it in

The contract amount is the figure before tax, which is normally what the contract states. On the reverse screen, enter the amount you want to see in your account instead. That is the easier direction when you are quoting a client.

Value added tax is a separate matter. A freelancer with a business registration who issues a tax invoice charges VAT on top, and in that case the 3.3% withholding usually does not apply. This calculator is aimed at personal services provided without a business registration.

In the side-by-side screen, the number of dependents and children is used only to find the employee side income tax. The freelancer side is 3.3% regardless of family size. Count yourself as 1 and add a spouse and dependents, and count only children aged 8 to 20 who are already inside that number.

How it meets the annual return

Article 70(1) of the Income Tax Act requires a resident with global income to file the tax base between 1 May and 31 May of the following year. That is why the 3.3% is not your final tax. You add up everything you were paid during the year, subtract deductible expenses to get taxable income, apply the rate schedule to get the real tax, and then subtract what was already withheld.

Sometimes that leaves a refund and sometimes a bill. People with modest revenue and recognised expenses usually get money back, while people whose revenue pushed them into a higher bracket find 3.3% was not enough and owe more. Which one you are depends on your own figures.

The thing that decides it is deductible expenses. You can keep books and prove actual spending, or skip the books and apply the standard expense ratio set for your industry code. Which route is open to you depends on that code and on how much you earned, and the same revenue can produce different tax under each route.

That is why this calculator does not estimate your annual tax. If we chose an expense figure for you, the number would have nothing behind it, and someone deciding a contract on that number would carry the cost of our guess. Check the real figure through the Hometax filing assistance data or a licensed tax accountant.

Where people get stuck

If your figure and the amount actually paid differ by tens of won, the rounding is usually the reason. We round both figures down to ten won, while some payers round to the nearest unit and some pay to the single won. A difference of thousands of won usually means the income was classified differently.

If 8.8% was withheld instead, that was other income, not business income. Article 129(1)6(d) of the Income Tax Act sets 20 out of 100 for other income, and article 87(1-2) of the Enforcement Decree recognises 60 out of 100 of the payment as deductible expenses, which is where that figure comes from. This calculator does not cover other income. Whether income is business income or other income turns on whether the work is continuous and repeated.

If nothing was withheld and you were paid in full, the payer may simply not be a withholding agent. Article 184(3) of the Enforcement Decree lists businesses, corporations, the state and local governments as the parties who must withhold, so an individual paying another individual outside a business has no such duty. Your own duty to report the income does not go away.

If you never received a withholding receipt, you can ask the payer for one. You can check whether the payment was reported by looking up the payment statement on Hometax, and for a dispute the National Tax Service counseling line is 126. This calculator is not tax advice.