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Tax incentives in question as average annual dividend income falls short of 100,000 won

Published: 17 Nov. 2025, 11:26

The Kospi and Kosdaq figures are shown on a screen at a Korea Exchange office in Yeouido, western Seoul, on Nov. 5. [KIM KYOUNG-ROK]

The average annual dividend income for Korea’s 14 million retail investors fell short of 100,000 won ($70), raising questions about the effectiveness of tax incentives for long-term investors, despite the president’s recent directive to enhance benefits for such shareholders.

According to data released Sunday by the National Tax Service, total dividend income for the 2023 tax year amounted to 30.22 trillion won. A total of 17.46 million people received dividends, with an average of 1.73 million won per person. However, the top 10 percent — or 1.75 million individuals — received 27.57 trillion won in dividends, accounting for 91 percent of the total. That group earned an average of 15.79 million won in dividend income per person.

The next 10 percent received a combined 1.5 trillion won, or 860,000 won each. By contrast, the bottom 80 percent — about 13.97 million investors — received only 1.14 trillion won combined, averaging 81,947 won per person annually.

During a Cabinet meeting last week, President Lee Jae Myung instructed officials to "develop tax benefits for long-term investors." But critics note that most retail investors already pay little to no capital gains tax on stock trading, making any new tax cut largely ineffective. Currently, capital gains tax is only levied on major shareholders who own over 5 billion won in a single stock. For the general public, the only potentially relevant tax incentive is a cut to dividend taxes — but with average payouts being so low, even that is likely to offer little relief.

Authorities say they are considering a range of measures to encourage long-term investments. One likely option is to raise the tax-exempt threshold for individual savings accounts. At present, profits of up to 2 million won — or 4 million won for low-income savers — are exempt from taxation if the account is held for more than three years. Income above that is taxed at a flat 9 percent rate.

Expanding the contribution limit for individual retirement pensions (IRPs) is also on the table. Because IRPs do not allow early withdrawals under normal circumstances, they are seen as an effective tool for fostering long-term investment. Authorities are reportedly considering an increase to the current 9 million won cap on tax-deductible contributions.

Other possibilities include reintroducing a tax deduction for long-term installment-based equity funds — a temporary measure implemented during the global financial crisis.

“We’re still exploring multiple possibilities,” a Finance Ministry official said. “Detailed discussions are ongoing, and final decisions will be incorporated into the national growth strategy early next year.”

This article was originally written in Korean and translated by a bilingual reporter with the help of generative AI tools. It was then edited by a native English-speaking editor. All AI-assisted translations are reviewed and refined by our newsroom.
BY JANG WON-SEOK [[email protected]]