Year-End Tax Settlement Checklist 2025: Key Deductions Every Employee Should Know
Year-end tax settlement is not just a yearly process — it’s a crucial opportunity to reduce taxes and receive refunds.
By preparing in advance, you can avoid missing deductions for expenses such as credit card use, medical bills, education fees, donations, pension contributions, and insurance.
This article outlines essential pre-check steps for employees in their 20s to 60s to ensure a smooth and beneficial tax settlement.
Table of Contents
- Understanding the Basics of Year-End Tax Settlement
1-1. What Is Year-End Tax Settlement?
1-2. Why Preparation Matters - Reviewing Income Deduction Items in Detail
2-1. Check Credit Card Spending Ratios
2-2. Collect Medical Expense Receipts
2-3. Review Education Expenses - Enhancing Tax Benefits through Tax Credit Items
3-1. Pension Savings and IRP Contributions
3-2. Insurance Premium Deductions
3-3. Donation Tax Credit - Don’t Miss Out on Dependent Family Deductions
4-1. Eligibility for Basic Deductions
4-2. Preventing Overlapping Claims - Using the Simplified Tax Service and Submitting Documents
5-1. How to Use the Simplified System
5-2. Documents That Require Manual Submission - Extra Strategies to Maximize Tax Refunds
6-1. Final Checks Before December
6-2. Building Smart Spending Habits
6-3. Integrating Tax Planning with Asset Management - Final Year-End Tax Checklist
- Timing Is the Key to Successful Tax Saving
1. Understanding the Basics of Year-End Tax Settlement
1-1. What Is Year-End Tax Settlement?
Year-end tax settlement is the process of recalculating the tax you paid throughout the year based on your actual income and deductible expenses.
In simpler terms, it’s your opportunity to claim back any excess tax you’ve paid.
By managing deduction items effectively, you can significantly increase your tax refund.
1-2. Why Preparation Matters
Although the filing happens in January or February, the real preparation period starts around October to December.
During this time, you can adjust credit card spending, increase donations, or make additional pension contributions to boost your deductions.
2. Reviewing Income Deduction Items in Detail
2-1. Check Credit Card Spending Ratios
To qualify for deductions, your credit card spending must exceed 25% of your annual salary.
If not, switch to debit cards or cash receipts for the remaining months to raise your deduction rate.
| Category | Deduction Rate | Condition |
| Credit Card | 15% | Spending over 25% of total salary |
| Debit Card / Cash Receipts | 30% | Same condition |
| Traditional Market / Public Transport | 40% | Additional deduction limit |
2-2. Collect Medical Expense Receipts
Non-covered medical expenses such as implants, LASIK, and oriental medicine are not automatically recorded.
Collect all receipts — especially those for elderly parents or disabled family members, as they can greatly increase your deductions.
2-3. Review Education Expenses
Tuition for graduate studies, children’s school fees, uniform purchases, and meal costs are deductible.
However, private academy or tutoring fees are excluded.
3. Enhancing Tax Benefits through Tax Credit Items
3-1. Pension Savings and IRP Contributions
You can claim up to 7 million KRW in deductions per year.
Making extra payments before December increases your refund potential.
3-2. Insurance Premium Deductions
Protection-type insurance premiums are eligible for deductions up to 1 million KRW annually,
while savings-type insurance is excluded.
Check your insurer’s app for easy access to payment certificates.
3-3. Donation Tax Credit
Donation credits vary depending on the organization (welfare, religion, education).
Ensure that all donation receipts not automatically listed in the system are manually submitted.
4. Don’t Miss Out on Dependent Family Deductions
4-1. Eligibility for Basic Deductions
Dependents earning less than 1 million KRW annually (or 5 million KRW in wage income) are eligible.
This includes parents, spouse, children, and siblings.
4-2. Preventing Overlapping Claims
If multiple siblings claim the same parent as a dependent, it can cause deduction issues.
Coordinate within your family to avoid overlaps.
5. Using the Simplified Tax Service and Submitting Documents
5-1. How to Use the Simplified System
Most data is automatically collected through the National Tax Service portal,
but certain expenses (glasses, donations, uniform costs) still need manual entry.
5-2. Documents That Require Manual Submission
- Glasses and contact lens receipts
- Donation receipts
- Uniform and field trip receipts
- Non-covered medical expense invoices
6. Extra Strategies to Maximize Tax Refunds
6-1. Final Checks Before December
All expenses such as donations, medical payments, and pension contributions must be completed before December 31.
6-2. Building Smart Spending Habits
Frequent use of traditional markets, public transportation, and debit cards will bring long-term tax savings.
6-3. Integrating Tax Planning with Asset Management
Pension and IRP accounts not only reduce taxes but also serve as long-term wealth management tools.
7. Final Year-End Tax Checklist
| Category | Item | Checked | Notes |
| Credit Card Deduction | Over 25% usage | ☐ | Switch to debit cards if necessary |
| Medical Expense | Non-covered receipts | ☐ | Include family expenses |
| Education Deduction | Tuition & uniform proof | ☐ | Verify per child |
| Donation Deduction | Collect all receipts | ☐ | Check religious donations |
| Pension / IRP | Verify total contribution | ☐ | Max limit: 7 million KRW |
| Insurance Deduction | Protection-type only | ☐ | Exclude savings-type |
| Dependent Deduction | No duplicate claims | ☐ | Coordinate with siblings |
8. Timing Is the Key to Successful Tax Saving
Year-end tax settlement is not a burden — it’s a financial strategy.
Proper expense management and timely preparation can lead to a meaningful refund.
By checking all deduction items now, you’ll welcome the next tax season with confidence — and perhaps a smile with your refund.