What Will Change Under the 2026 Tax Laws?

1 day ago
4 min read

What Will Change Under the 2026 Tax Laws?

Key Points of the 2026 Tax Reform Proposal for Business Owners and Real Estate Owners

Hello,

We are Jz Associates, helping business owners and company representatives navigate their tax-related concerns.

Tax laws change every year, but this year there are several noteworthy proposed changes, particularly regarding real estate, business succession, and corporate taxation.

On August 3, 2026, the Korean government announced the 2026 Tax Reform Proposal.

The proposal has not yet become final legislation, as it still needs to go through the legislative process. However, it is scheduled to go through a legislative notice period before being submitted to the National Assembly in early September. Therefore, business owners and real estate owners should pay attention to these changes in advance.

Today, we will take a closer look at some of the proposed changes that may have a practical impact on your taxes.

① Real Estate Taxes: Will How Long You Live in a Property Become More Important Than How Long You Own It?

One of the notable changes in the 2026 tax reform proposal is the proposed revision of the long-term holding special deduction for residential properties.

Currently, when selling a residential property, taxpayers may qualify for a long-term holding special deduction depending on factors such as the holding period and period of actual residence, provided that certain requirements are met.

Under the proposed reform, the long-term holding special deduction for residential properties would be reorganized into a "long-term residence income deduction," placing greater emphasis on the period of actual residence.

In other words, rather than simply thinking,

"I've owned my home for a long time, so I should receive a large deduction, right?"

it may become increasingly important to consider your actual period of residence, the type of property, and your overall real estate holdings.

If you own multiple residential properties or are considering selling a property in the future, it is advisable to calculate the potential tax liability in advance, as the amount of tax may vary depending on the timing of the sale.

② If You Own Non-Business Land, You May Need to Pay Closer Attention

The 2026 tax reform proposal also includes measures to increase taxation on non-business land.

Under the proposal, when an individual sells non-business land, the limitation on deductions related to long-term holding would be strengthened, while the additional tax rate would increase from the current 10 percentage points above the basic tax rate to 20 percentage points.

For corporations holding non-business land, the additional corporate tax rate would also increase from 10% to 20%.

Some of these proposed changes would apply to transfers made from 2028 onward.

Therefore, rather than thinking,

"There is still plenty of time. I'll deal with it later."

it may be worthwhile to review the current use of your land and your future plans for selling it in advance.

③ Planning to Transfer Your Company to Your Children? Business Succession Tax Rules Matter

If you have operated a business for many years, you may have asked yourself:

"If I pass my company on to my children, how much tax will they have to pay?"

This is where business succession and inheritance tax rules become particularly important.

The 2026 tax reform proposal includes substantial changes to the business inheritance tax deduction system.

The business inheritance deduction is not simply a matter of deducting a certain amount from inherited assets. A number of factors must be reviewed together, including:

The company's business type
The predecessor's management period
The successor's eligibility
The company's shareholding and ownership structure
Post-inheritance management requirements

Therefore, rather than assuming,

"Our company should qualify for the business inheritance deduction,"

it is important to review the company's current ownership structure and the business owner's circumstances well in advance.

When Tax Laws Change, the Most Important Question Is: "How Will This Affect My Taxes?"

When reading tax news, you may often hear statements such as:

"The tax rate is going up."

"The deduction is being reduced."

"The rules will change next year."

However, what really matters is how the changes will affect your individual tax liability.

For example, even if two people own apartments of similar value, their tax liabilities may differ depending on:

① Date of acquisition② Acquisition price③ Expected selling price④ Actual period of residence⑤ Number of residential properties owned⑥ Acquisition and disposal dates of other properties⑦ Planned date of sale

The same principle applies to business owners and corporations.

It is important to look beyond sales and expenses and consider the overall business structure, transactions between the business and its representative, acquisition and disposal of assets, and ownership of shares in order to accurately assess the potential tax burden.

When Should You Consider Consulting a Tax Professional?

We recommend considering a tax consultation if you:

✔ Are planning to sell real estate

✔ Own multiple residential properties or parcels of land

✔ Own non-business land

✔ Are considering transferring your company to your children

✔ Want to plan ahead for inheritance or gifts

✔ Have questions about converting your business into a corporation or managing a corporation

✔ Want to understand how proposed tax law changes may affect your future tax liability

In particular, when dealing with high-value assets such as real estate or company shares, it is important to calculate and review the potential tax liability before completing the transaction, rather than finding out how much tax you owe afterward.

A little advance planning can make a significant difference in your final tax burden.