Regulatory Update
2026 Korean Inheritance Tax: Current Rules & Upcoming 2028 Reform
In Brief
The 2026 Korean inheritance tax rules are largely unchanged from 2024–2025, but a major 2028 reform would shift the system from estate-based (tax on the total estate) to inheritor-based (tax on each heir's share) — the first major revision in 75 years. Korean parents planning bequests to multiple heirs should watch this carefully.
2026 Current Rules — What's in Effect Now
The base structure has not changed for 2026:
| Item | 2026 figure |
|---|---|
| Top rate | 50% (over ₩3B taxable base) |
| Lump-sum deduction (residents) | ₩500M |
| Spousal deduction (residents) | up to ₩3B |
| Non-resident decedent — basic deduction | ₩200M only |
| Family business succession deduction | up to ₩60B (tiered) |
| Filing deadline — overseas heirs | 9 months |
| Installment payment interest (연부연납) | 3.1% per year (revised from 2.9% earlier) |
The Big One — 2028 Reform Proposal: Inheritor-Based Taxation
Korea has used estate-based taxation since 1950 — the total estate is taxed first, then the after-tax amount is divided among heirs. The Ministry of Economy and Finance has proposed shifting to inheritor-based (유산취득세): each heir is taxed only on their individual share.
Why it matters: under estate-based taxation, a ₩4B estate split among 4 children pays the top 50% rate on the portion over ₩3B. Under inheritor-based, each child receives ₩1B → taxed at 40% bracket only. The same family pays significantly less.
Current status (as of mid-2026): under government review; if enacted, expected effective around 2028. Watch for legislative updates.
The Spousal Exemption Discussion
Separately, there is ongoing debate about abolishing inheritance tax between spouses entirely — bringing Korea in line with most OECD countries. As of 2026, the spousal deduction is capped at the lower of ₩3B or the legal inheritance share. A full exemption is proposed but not yet enacted.
What US Heirs Should Watch
- Estate vs. inheritor-based shift — if your parent dies before 2028, current rules apply; if after, you may benefit from a lower personal bracket
- Spousal exemption — Korean spouses of deceased Korean residents may pay zero inheritance tax in the near future
- Top-rate target — there have been proposals to reduce the 50% top rate (high by international standards) to 40%. None enacted yet
- 2026 calculator — our free calculator uses 2026 rules. We will update it if law changes
What Has NOT Changed
- Korean residency test — still 183 days + Korean address; citizenship still does not matter
- Non-resident penalty — still ₩200M deduction only; this is the largest single tax driver for US-domiciled Korean parents
- 9-month overseas filing deadline — unchanged
- No Korea-US estate tax treaty — still relies on IRC §2014 unilateral foreign death tax credit via Form 706-CE
Planning Implication
For Korean parents currently in their 70s with US-resident children: the residency conversion and 10-year gifting strategies remain the most impactful tools, regardless of any 2028 reform. See pre-death planning guide (Korean).
General information only — not tax or legal advice. Pending reforms are subject to change; verify with a Korean CPA & Tax Accountant before acting. US-side estate planning is referred to partner US-licensed professionals.