Compliance
Compliance Alert: Simplifying Payroll Reporting and EITC Boosts for Low-Income Korean Workers in 2026
New government proposals aim to ease burdens on small employers and expand worker support via higher EITC—find out what changes are pending, who benefits, and next steps.
By NomadicTax Research Team • 5-8 min read • September 1, 2026
## Payroll Reporting Changes (소액 근로소득 간이지급명세서)
Starting **January 1, 2027**, individuals and businesses with frequent payroll reporting requirements will face **simplified reporting** under revised rules:
- Employers making payments tied to **regular salaries** might be able to use simplified payroll statements (*간이지급명세서*) for small values or when inaccuracies are under **5%** of payment value. ([j.nts.go.kr](https://j.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=239032&mi=40678&utm_source=openai))
- There’s a **temporary waiver**, for small employers (≤ 20 employees), of late submission penalties if the simplified reports are filed by the old deadline in 2026. Penalty rate proposed is **0.25%**, but it may be waived under the special case. ([j.nts.go.kr](https://j.nts.go.kr/nts/cm/cntnts/cntntsView.do?cntntsId=239032&mi=40678&utm_source=openai))
## Expanded Worker Support: EITC & Child Allowance Changes
In August 2026, the Korean tax authorities announced a **substantial increase** in support for low-income workers via its **Earned Income Tax Credit (EITC)**:
- Income thresholds raised—**single households** from ₩22 million to ₩26 million; **two-parent single earner households** from ₩32 million to ₩37 million; **dual‐earner households** from ₩44 million to ₩52 million. Maximum credit amounts also increased. ([j.nts.go.kr](https://j.nts.go.kr/nts/na/ntt/selectNttInfo.do?bbsId=1028&mi=2201&nttSn=1354474&utm_source=openai))
## What Employers and Individuals Should Do Now
- Employers should audit payroll processes, especially for small business owners: ensure correct categorization of employees, maintain records of salary levels to avoid triggering unintended reporting gaps.
- Document payments and deductions carefully to benefit entitled employees.
- Individuals in low-income brackets should check eligibility as thresholds change—they may now qualify where they didn’t before.
- Prepare for implementing the new reporting standards in 2027, especially for what kinds of income or part-time work will require monthly vs semiannual reporting.
## Practical Example
- A small café with 15 staffers currently submitting payroll twice yearly may under new rules need to file monthly simplified payroll statements, but small-business penalty protections may apply in 2027 for late filings.
- A single mother earning ₩24 million in 2026 (just under prior ₩22 million limit) would now qualify for a larger EITC under the expanded thresholds.
**Take-away**: These pending changes aim to reduce compliance burden for small businesses while giving more income relief to low earners. Stay tuned for final legislation, but begin systems review immediately to avoid surprises.