The Basics of Dividend Income Tax (Domestic)
A Samsung Electronics dividend came into your account, but why did a bit less come in than the amount you were entitled to? The identity of that vanished 15.4% is the dividend income tax.
How Is the 15.4% Formed?
When you receive a dividend from a domestic listed stock, tax is deducted first before it comes into your account. This is called "withholding." It is a method in which the company or brokerage deducts the tax in advance at the moment the dividend is paid and remits it to the state on your behalf. It is processed automatically without you filing separately.
The rate deducted at this point is 15.4%. It seems like an odd number at first glance, but its composition is simple: dividend income tax (income tax) 14% + local income tax 1.4% (10% of the income tax) = 15.4%.
For example, if you receive a dividend of 1 million won, 154,000 won is taken as tax and 846,000 won actually comes into your account. If you forget this tax when calculating your dividend yield, you will overestimate the money you actually pocket.
The tax rates and limits in this article are as of July 2026, and tax law can be revised each year.
20 Million Won a Year, the Threshold of Comprehensive Taxation
For most individual investors, taxation ends "cleanly" with just the 15.4% withholding. This is called separate taxation. Dividend income is taxed on its own and that's the end of it.
But if the total financial income (interest + dividends) received in one year exceeds 20 million won, the story changes. The excess is recalculated the following May at the comprehensive income tax filing, combined with other income such as earned income and business income. This is "comprehensive financial income taxation."
The comprehensive income tax rate is a progressive structure that rises from 6% to 45% as income grows. So if someone with a lot of other income also receives dividends exceeding 20 million won, they may pay additional tax beyond the 15.4% already deducted.
Only "the excess" above 20 million won is comprehensively taxed. For example, if dividends are 25 million won, it is calculated by the threshold concept rather than on the full amount, and in practice it is taxed at whichever is larger compared with the withholding tax already paid (comparative taxation).
Why You Should Know This in Advance
Dividend-stock investing is attractive for the "cash that comes in steadily," but the story changes a bit when viewed on an after-tax return basis. Even if the nominal dividend yield is 5%, after deducting 15.4% the effective yield becomes about 4.23%.
Also, in a strategy of reinvesting dividends to aim for compounding, the tax deducted each time reduces the reinvestment principal and eats into the long-term compounding effect. This "return loss due to tax" is called tax drag.
Conversely, using products that automatically reinvest dividends or tax-saving accounts (ISA, pension accounts) can defer or reduce this tax burden. The method that fits you depends on the dividend size and your other income, so it is important to understand the structure first rather than to recommend a specific product.
常见问题
Q. If I receive dividends, do I have to file separately with the tax office?
In most cases, no. Because the brokerage withholds 15.4% and wraps it up, if your annual financial income is 20 million won or less, no separate filing is needed. However, if your interest and dividends combined exceed 20 million won, you must file it as combined comprehensive income tax the following May.
Q. Is the tax on overseas stock dividends also 15.4%?
It differs. Overseas stock dividends are first taxed locally (usually 15% in the U.S.), and if that rate is higher than the domestic 14%, there is no additional domestic levy, but the handling of local income tax and such differs. It should be viewed separately from the domestic dividend tax, and overseas dividends are also included in the 20-million-won total for domestic comprehensive financial income taxation.
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