The income thresholds for the Earned Income Tax Credit (EITC) are being significantly relaxed. Income requirements are being raised across all household types — single, single-earner, and dual-earner — expanding eligibility for households that had previously been excluded from support due to increased earned income.

What Is the EITC?

The EITC is a work-contingent income support system that provides cash payments to low-income working households to boost work incentives and promote living stability. It shares similarities with a "negative income tax" in that, rather than collecting taxes, it provides incentive payments to low-income working households that meet certain requirements.

The system was introduced amid growing social concern for the working poor following the foreign exchange crisis, addressing the need to support populations that were difficult to protect through existing social insurance and public assistance programs alone. Following its introduction in 2008, payments began in 2009, and both the scope of eligible recipients and payment ranges have been gradually expanded since.

Key Details of the Income Threshold Increase

According to the government's "2026 Tax Revision Plan," the EITC income thresholds are raised as follows:

• Single-person households: 26 million won (up 4 million won from previous)
• Single-earner households: 37 million won (up 5 million won from previous)
• Dual-earner households: 52 million won (up 8 million won from previous)

In particular, dual-earner households with annual incomes exceeding 50 million won may now qualify for EITC payments, provided they meet property, household composition, and other relevant requirements.

Background of the Revision: Minimum Wage Increase

Rising wage levels influenced the income threshold adjustment. With the 2027 minimum wage set at 10,700 won per hour and earned incomes rising, maintaining the existing income thresholds would have resulted in more households losing EITC eligibility solely due to income growth.

Core Purpose of the EITC

The core of the earned income tax credit system goes beyond simple cash support. Its purpose is to maintain work incentives while supplementing disposable income by providing incentive payments to households that continue working and earn below a certain income level.

Internationally, the United States is a representative example, having introduced its earned income tax credit in 1975. Through multiple rounds of institutional reform, it has become a key policy tool for supporting low-income working households. South Korea has also continuously adjusted income and property thresholds as well as payment methods since introducing the system, steadily broadening the scope of support.

Important Notes

Meeting the income requirements does not guarantee that all households will receive the EITC. Actual payment eligibility and amounts are determined through a comprehensive assessment of household type, total income, property, and other relevant conditions.

Furthermore, these provisions are part of the government's tax revision plan, and follow-up legislative procedures, including amendments to relevant tax laws, are necessary for actual implementation. Households preparing to apply must verify the final confirmed income and property requirements and application criteria at the time of implementation.

[EITC eligibility and payment amounts may vary depending on individual conditions such as household composition, income, and property. Since the contents of the tax revision plan may change during the National Assembly's legislative process, applicants should confirm the final criteria established by the National Tax Service and relevant authorities when applying. This article was written with AI assistance.]