South Korea’s ruling and opposition parties are debating whether to abolish the inheritance tax for spouses, arguing that taxation should only apply when wealth is transferred between generations. Countries such as the United States, the United Kingdom, France, and Japan already exempt spousal inheritance from taxation.
Interim ruling party leader Kwon Young-se called for South Korea to follow suit, saying inheritance between spouses should not be considered an intergenerational wealth transfer. “Spouses build their wealth together,” he said during a March 6 party meeting. “We will push for the complete abolition of inheritance tax on spousal transfers.”
The opposition Democratic Party of Korea (DPK) has instead proposed raising the exemption threshold from the current 1 billion won ($750,000) to 1.8 billion won, a move seen as an appeal to middle-class homeowners in Seoul. In response, the ruling People Power Party (PPP) has positioned its call for full abolition as a direct counterproposal.
South Korea is one of only 12 out of 38 OECD countries that still impose an inheritance tax on spouses, according to the Korea Institute of Public Finance (KIPF). Kwon also proposed reforming the country’s estate-based taxation system to an inheritance-based model, which would tax each heir only on their individual share rather than the total estate. A PPP official said both spousal tax abolition and inheritance tax reform would be pursued as a package.
Among OECD countries that tax spousal inheritance, South Korea’s burden is among the highest. Countries like Germany, Greece, and the Netherlands use an inheritance-based system, which applies taxes only to what each heir personally receives. In contrast, South Korea levies tax on the total estate, making all heirs jointly liable.
Experts argue that taxing spousal inheritance contradicts the fundamental purpose of inheritance tax, which is meant to regulate wealth transfers between generations. “If wealth is taxed when it passes to a spouse and then again when it is transferred to children, that amounts to double taxation within the same generation,” said Kim Woo-chul, a taxation professor at the University of Seoul. Oh Moon-sung, a professor at Hanyang Women’s University, added, “Spouses function as an economic unit—taxing one when the other dies is illogical.”
A KIPF report analyzing inheritance tax systems across OECD nations found that many fully exempt spousal inheritance, citing principles such as ‘one generation, one taxation’ and the recognition of a surviving spouse’s contribution to wealth accumulation. The report also noted that taxing spousal inheritance creates inconsistencies, as divorce settlements are not subject to gift taxes.
Even among countries that do tax spousal inheritance, some—including Germany, Belgium, and Greece—offer exemptions for primary residences, ensuring that surviving spouses are not forced to sell their homes to pay taxes.
If either party’s proposal is implemented, the inheritance tax burden in South Korea would drop significantly. A simulation by real estate tax consultancy Artiwealth, commissioned by The Chosun Ilbo, found that under current law, a surviving spouse and two children inheriting a 2 billion won ($1.5 million) estate would owe 128.87 million won ($96,000) in taxes. Under the opposition’s proposal to raise the exemption threshold, that figure would fall to 29.1 million won ($22,000). The government’s plan to exempt up to 500 million won per child would eliminate the tax entirely.
Tax experts say that if the ruling party’s plan for full spousal exemption is adopted, families would likely structure inheritances so that the surviving spouse inherits the full estate to avoid taxation. By contrast, under the opposition’s plan, even if a spouse inherits the full 2 billion won, they would still face a 29.1 million won tax bill due to the legal cap on exemptions.
