In Korea, a performance bonus is wage income in full — whether it arrives as cash or as company stock. If it arrives as stock, the tax base is the closing price on the day the shares are handed over, and whether you sell them makes no difference. Even if the share price is cut in half later, the wage income tax already assessed does not come back.
In August 2026 the tentative labor agreement at SK hynix was voted down by 25 ballots — 7,510 in favor (49.9%) against 7,535 opposed (50.1%), according to Money Today. The proposal would have paid 40% of the profit-sharing bonus (PS) in cash and the remaining 60% in company shares. Around the same time Hyundai Motor reached a tentative deal after 111 days of talks: a 100,000-won base pay rise plus a management bonus of 400% of monthly pay and 12.7 million won, along with 15 shares of stock. As bonuses increasingly mix cash and equity, when and how much tax attaches has become the variable that decides take-home pay.
Why the bonus month feels so heavily taxed
Monthly payroll withholding follows the National Tax Service simplified wage withholding table. Months with a bonus are calculated differently. For a bonus with a defined coverage period, the amount withheld is set in four steps: add the bonus to the regular pay for that period, divide by the number of months in the period to get a monthly average, look that average up in the table, multiply the resulting tax by the number of months, then subtract what has already been withheld.
That means the same bonus is withheld differently depending on how many months the coverage period spans. A bonus of 12 million won treated as covering twelve months adds 1 million won to the monthly average; treated as covering three months it adds 4 million won. The larger the add-on, the higher the bracket in the withholding table, and the sharper the hit in that month's payslip. A coverage period longer than a year is capped at one year, and any remainder shorter than a month counts as a full month.
The key point is that this figure is not the final tax. The withholding table is an advance estimate; the real liability is settled the following year at year-end tax settlement, when the entire year's wage income is added up. Over-withhold and you get a refund; under-withhold and you pay the difference. The tax office also lets employees choose 80%, 100% or 120% of the table amount, either by filing an adjustment request or by writing the ratio on the income and tax deduction declaration. Either way the annual total is identical — only the cash-flow timing changes.
Withholding is a prepayment, not a verdict. What decides the real tax is not the amount taken in the bonus month but the tax bracket the bonus pushes you into.
On a 10 million won bonus, what does your bracket cost you?
The tax settled at year end follows the eight brackets of the official rate schedule, from 6% on a tax base up to 14 million won to 45% above 1 billion won. A bonus stacks on top of existing wage income, so the rate it actually attracts is determined by which bracket your tax base already sits in. Local income tax adds another 10% of the income tax on top.
The table below assumes a bonus of 10 million won that stays inside a single bracket. Note that the tax base is what remains after the wage income deduction and personal exemptions — it is not the same number as your salary.
| Existing tax base bracket | Income tax rate (%) | Incl. local tax (%) | Tax on 10m won (KRW) | After tax (KRW) |
|---|---|---|---|---|
| Up to 14m won | 6 | 6.6 | 660,000 | 9,340,000 |
| 14m–50m won | 15 | 16.5 | 1,650,000 | 8,350,000 |
| 50m–88m won | 24 | 26.4 | 2,640,000 | 7,360,000 |
| 88m–150m won | 35 | 38.5 | 3,850,000 | 6,150,000 |
| 150m–300m won | 38 | 41.8 | 4,180,000 | 5,820,000 |
| 300m–500m won | 40 | 44.0 | 4,400,000 | 5,600,000 |
| 500m–1bn won | 42 | 46.2 | 4,620,000 | 5,380,000 |
| Over 1bn won | 45 | 49.5 | 4,950,000 | 5,050,000 |
The same 10 million won leaves anywhere between 9.34 million and 5.05 million won in hand. If the bonus is large enough to cross a bracket line, only the portion above the line takes the higher rate — crossing does not reprice the whole amount. In a year when the bonus overlaps with dividend and interest income, it is worth checking whether the 20 million won financial income aggregation threshold also comes into play.
When is a stock bonus taxed, and on what?
A stock bonus is taxed on the day the shares are received. When a company hands treasury shares to employees as a bonus, it is treated as paying wage income equal to the market value on that date. One reported case involved a 100 million won salary plus a 50 million won cash bonus and a 550 million won stock bonus — total wage income of 700 million won, which lands in the top bracket of 49.5% including local tax, implying a tax bill estimated in the low-to-mid 200 million won range.
Three things diverge here. First, the wage income tax is fixed at the grant-date closing price regardless of whether you sell. Second, when the shares are eventually sold, most employees owe no capital gains tax — Korean capital gains tax on listed shares applies to large shareholders holding 5 billion won or more in a single stock. Third, selling triggers securities transaction tax, roughly 0.20% including the special rural development surtax, the same structure covered in how securities transaction tax is calculated.
Suppose you receive 200 shares at a grant-date closing price of 50,000 won — 10 million won in value — and your existing tax base sits in the 88m–150m won bracket (38.5% including local tax). The wage income tax of 3.85 million won is locked in regardless of what the share price does next.
| Share price at sale (KRW) | Sale proceeds (KRW) | Transaction tax 0.20% (KRW) | Wage income tax (KRW) | Net after all tax (KRW) |
|---|---|---|---|---|
| 60,000 (+20%) | 12,000,000 | 24,000 | 3,850,000 | 8,126,000 |
| 50,000 (same as grant) | 10,000,000 | 20,000 | 3,850,000 | 6,130,000 |
| 40,000 (−20%) | 8,000,000 | 16,000 | 3,850,000 | 4,134,000 |
| 30,000 (−40%) | 6,000,000 | 12,000 | 3,850,000 | 2,138,000 |
The whole point of the table is that 3.85 million won never moves. If the price drops 40%, the proceeds are 6 million won while the tax was assessed on 10 million won, so what is left falls to 2.14 million won. There is no route to reclaim wage income tax because the share price fell. In the other direction, any gain above the grant price is effectively untaxed for anyone who is not a large shareholder. A stock bonus is taxed once, at receipt; after that the shares behave like any other holding in your brokerage account.
Where the stock portion carries sale restrictions and deferred delivery, as in the SK hynix proposal, one more variable appears. Under the reported terms, 40% of the stock portion could be sold from the day after receipt, while 20% would be delivered over two years in 10% tranches. Because tax is assessed on the market value at each actual delivery, the deferred portion counts as wage income in the year it is actually handed over. If a promotion or another bonus lands in that same year, the row of the table you occupy changes with it.
How your employer withholds is also worth checking
A stock bonus is an in-kind payment, so there is no cash inside it to withhold from. Employers generally pick one of two routes: deduct the tax from salary first and deliver only the after-tax number of shares, or deliver all the shares and take the tax out of other pay. The first route settles the tax without forcing a sale but shrinks that month's take-home pay sharply; the second leaves you to find the cash for the tax bill.
On the accounting side, the company values its treasury shares at market price, books them as a bonus, meets its withholding obligation and then delivers the shares, with the gap between book value and market value taken into taxable income or deductible expense. From the employee's side, the two lines that actually matter are on the grant notice: the valuation price used and the withholding method. Those two lines effectively determine your cash flow for the year and the outcome of your year-end settlement.
What to watch
- The coverage period on the bonus notice — it sets how much is withheld that month
- The closing price on the valuation date for the stock portion — that figure is the wage income amount and the tax base
- The withholding method — after-tax share delivery, or a separate deduction from salary
- Sale restriction and deferred delivery dates — deferred tranches count as income in the year of actual delivery
- Your projected tax base for the year — which row of the table the bonus moves you to
- Whether you elected 80%, 100% or 120% withholding — the annual total is the same, only the refund timing shifts
- The year-end settlement result — the gap between total withholding and final liability is your refund or extra payment
