[Prime Economy] As Kakao Bank strengthens its guidance on the 'seizure-prevention account' system aimed at protecting living expenses, interest in the financial safety net for low-income earners is growing. The government is also pushing to raise the seizure exemption threshold for earned income and child tax credits from the current 1.85 million won to 2.5 million won, drawing simultaneous attention to institutional reforms by both the financial sector and policy authorities.

Kakao Bank Announces "2.5 Million Won Seizure Protection for Living Expenses"

Kakao Bank recently stated through a notice that the government is operating a living expense account system to protect the basic livelihood of its citizens. The notice clearly defined the purpose of the system, including the phrase, "a dedicated account where 2.5 million won, equivalent to one month's living expenses, can be protected from seizure." Currently, under the National Tax Collection Act, the threshold for small-value property exempt from seizure has been raised to 2.5 million won.

Conflicting Standards Under Current Laws... Push to Raise Thresholds for Earned Income and Child Tax Credits

However, the seizure exemption standard for earned income and child tax credits remains at 1.85 million won. Despite being similar livelihood-supporting funds, the scope of protection varies depending on the legislation (the National Tax Collection Act and the Restriction of Special Local Taxation Act), which has led to criticisms that practical confusion among financial institutions, creditors, and taxpayers has repeatedly occurred on-site. In particular, there have been persistent voices arguing that the fact that a portion of the credits, which are intended to support the livelihood of low-income earners, could be subject to seizure contradicts the purpose of the system.

In response, the government is reviewing a plan to raise the amount protected from seizure among the refunded earned income and child tax credits to the 2.5 million won level. If the revision is implemented, it is expected to resolve much of the discrepancy in standards between related laws. The details are scheduled to be reflected in the upcoming amendment to the enforcement decree of the Restriction of Special Local Taxation Act, with implementation potentially occurring in the first half of 2026. However, the final implementation date and detailed scope of application are expected to be confirmed through future legislative procedures and consultations with relevant ministries.

Financial Sector's Expected Effects and Precautions

The financial sector anticipates that the simultaneous alignment of seizure-prevention accounts and the seizure exemption standards for tax credits will further strengthen the protection of minimum living expenses for low-income households. It is also analyzed that this could mitigate confusion in administrative processing and grievances related to seizures.

However, as the actual scope of protection and applicability may vary depending on individual debt situations, seizure statuses, and the legal provisions at the time of implementation, it is necessary to confirm the specific standards.

[※ The information provided in this article is intended to aid general understanding of policies, and results may vary depending on actual policy application and individual circumstances. As government guidelines are subject to frequent changes, please be sure to check official materials from relevant ministries. This article was written with the assistance of AI. This publication bears no legal or financial responsibility for the information.]