Tax Report: Analysis of Lottery Prize Tax System
“If I win 2 billion KRW, how much will I actually receive?” Lottery prize money is classified as ‘other income’ under income tax law and is paid after withholding tax at determined rates.
Tax Basis and Tax Rate Brackets
The tax standard for lottery prize money is specified in Income Tax Act Article 21 (Other Income).
- 50,000 KRW or less: Tax-free
- Over 50,000 KRW ~ up to 300 million KRW: 22% (income tax 20% + local income tax 2%)
- Amount exceeding 300 million KRW: 33% (income tax 30% + local income tax 3%)
The most important point is that the high tax rate of 33% is applied only to the ‘amount exceeding 300 million KRW’.
Net Amount Calculation Simulation
Case 1: Total Prize Money 1 Billion KRW
| Category | Calculation Process | Amount |
|---|---|---|
| Total Prize Money | - | 1,000,000,000 KRW |
| Tax on amount up to 300 million KRW | 300,000,000 KRW × 22% | 66,000,000 KRW |
| Tax on amount exceeding 300 million KRW | (1,000,000,000 - 300,000,000) KRW × 33% | 231,000,000 KRW |
| Total Tax Deducted | 66,000,000 + 231,000,000 | 297,000,000 KRW |
| Final Net Amount | 1,000,000,000 - 297,000,000 | 703,000,000 KRW |
Case 2: Total Prize Money 5 Billion KRW
| Category | Amount |
|---|---|
| Total Prize Money | 5,000,000,000 KRW |
| Tax on amount up to 300 million KRW | 66,000,000 KRW |
| Tax on amount exceeding 300 million KRW | 1,551,000,000 KRW |
| Total Tax Deducted | 1,617,000,000 KRW |
| Final Net Amount | 3,383,000,000 KRW |
International Comparison
- Korea: Progressive tax (33% on amounts exceeding 300 million KRW)
- USA Powerball: Federal tax up to 37% + state tax
- Europe EuroMillions: Mostly tax-free
Conclusion
When lottery prize money exceeds 300 million KRW, a high tax rate of 33% applies, but it’s important to remember the progressive deduction method where it only applies to the excess amount.
After winning, we hope you establish a systematic asset management plan with experts based on the net amount after taxes to preserve your precious luck for a long time.