South Korea plans to overhaul its inheritance tax system by replacing the current estate tax with an inheritance acquisition tax starting in 2028. Under the existing structure, taxes are levied on the deceased’s total estate, with the surviving spouse and children collectively responsible for payment. The proposed system, however, would tax each heir individually based on the assets they inherit. The government also intends to raise deduction limits for spouses and children, easing the overall tax burden.
Since the transition requires a comprehensive revision of the Inheritance Tax Act, its implementation will depend on the stance of the Democratic Party of Korea, which holds a parliamentary majority.
On Mar. 12, the Ministry of Economy and Finance outlined its plan for introducing the inheritance acquisition tax and announced it would submit a related bill to the National Assembly in May. If approved, the new system will take effect in 2028. The move follows remarks made in November by Acting President and Finance Minister Choi Sang-mok, who stated that the government would introduce the bill in the first half of this year.
Under the current estate tax model, heirs—including the spouse and children—are jointly responsible for paying taxes on the deceased’s total estate. In contrast, the proposed inheritance acquisition tax would impose taxes on each heir individually, based on the value of their inherited assets. The Finance Ministry has advocated for the shift, arguing that it aligns with the principle of taxing individuals based on their actual acquisition.
Among the 24 member nations of the Organization for Economic Cooperation and Development (OECD) that impose inheritance taxes, only South Korea, the United States, the United Kingdom, and Denmark still use the estate tax model. Academics have long called for a transition to the inheritance acquisition tax, citing it as the global standard.
Under the proposed system, each heir would be responsible for their own tax payment. However, if an heir has already spent their inheritance or resides overseas, making tax collection difficult, the remaining heirs may be required to cover the unpaid amount. Additionally, if both the deceased and the heir are nonresidents (foreign nationals), only assets located in South Korea would be taxed. If either the deceased or the heir is a resident (South Korean national), taxes would apply to the entire global estate.
The government also plans to revise deduction structures as part of the reform. Under the current system, heirs can either claim a 5 billion won ($344,800) deduction for the surviving spouse and an additional 5 billion won under a lump-sum deduction or opt for a 5 billion won spousal deduction, a 2 billion won ($137,900) basic deduction, and 500 million won ($34,400) per child. For families with up to six children, the lump-sum deduction offers a greater tax benefit.
