Securities transaction tax increase to 0.20% starting in 2026

what is a stock transaction tax?

securities transaction tax is a tax levied on the sale of stocks. When you sell a stock, regardless of whether you made a profit or a loss, a percentage of the sale price is withheld. In other words, it's a tax on the sale of stocks.

currently, both the KOSPI and KOSDAQ transaction taxes are applied at a rate of 0.15%, but this will change from next year due to the government's tax law revision.

changes to the securities transaction tax rate in 2026

the government has decided to increase the securities transaction tax rate by 0.05%P from January 2, 2026. The transaction tax rate will increase from 0.15% to 0.20%.

to give you a concrete example, let's say you sell 100 million won worth of Samsung Electronics stock.

currently, 150,000 won (0.15% of 100 million won) is withheld, but after January 2, 2025, 200,000 won will be collected for the same sale. that's an extra 50,000 won.

this tax hike is expected to raise about 12 trillion won in additional tax revenue over the next five years.

impact analysis by investor

long-term investors may not feel the impact of the securities transaction tax hike as they make fewer trades per year.

on the other hand, the tax burden on ultra-short-term traders will be considerably higher. If you are a short-term investor who buys and sells dozens of times a day, the transaction tax burden will accumulate and directly affect your returns.

if you are sensitive to taxes on stock investments, you may want to review your investment strategy before next year's tax reform.

new Taxation of Reduced Dividends for Major Shareholders

the government has decided to apply dividend income tax to reduced dividends for major shareholders only.

while a normal dividend is a distribution of a company's profits to shareholders, a reduction in dividends is a capital reserve dividend, which is a return of capital rather than profits. It has been exempt from taxation because it is not a distribution of profits.

this controversy is directly related to the Merits Financial Holdings dividend case, where the largest shareholder received KRW 360 billion in two dividends and paid no taxes.

the government decided that it was not tax equitable for the largest shareholder to receive such a large amount of money without paying taxes.

however, the taxation threshold for major shareholders is strict: only if the amount of the dividend exceeds the purchase price of the shares, the excess is taxed. the actual application is likely to be limited.

frequently asked questions

Q. when will the 2025 increase in securities transaction taxes take effect? A. The new rate of 0.20% will apply to sales on or after January 2, 2025.

Q. will retail investors be affected by the increase? A. Yes. the same tax rate will apply to all investors when selling shares, regardless of the amount.

Q. is the taxation of reduced dividends applicable to all shareholders? A. No. Only major shareholders will be taxed, not minority shareholders.

Q. how much more tax will the transaction tax increase raise? A. The government expects to raise about KRW 12 trillion in additional tax revenue over the next five years.

bottom line

starting in 2025, the tax rate for selling stocks will increase from 0.15% to 0.20% due to the increase in the securities transaction tax, and taxation will also begin on dividends reduced by major shareholders.

if you're planning to invest in stocks, make sure you're aware of the changing tax policies. if you have any questions, please leave a comment and if you found this article useful, please subscribe and like it.