Last reviewed · 2026-10-25 · Income Tax Act (in force 2026-07-01), its Enforcement Decree and the Local Tax Act

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South Korea Lottery Prize Tax Guide and Net Payout Calculator

A Lotto 6/45 jackpot winner in South Korea does not receive the full advertised prize. Income tax and local income tax are withheld before payment. This guide explains which statutes produce that calculation, which amounts attract which rate, and which parts we could not yet verify. It is about what happens after a win, not about the chance of winning: every valid combination has the same probability, and taxes do not depend on the numbers you chose.

Scope first. The guide assumes a Korean tax resident who receives a prize from a lottery issued and paid in Korea. Non-residents and foreign lotteries are not covered. Pension Lottery 720+ pays in instalments and is excluded from the calculator; a separate section below reports only the operator's statement.

Summary: the key rates

A prize above KRW 300 million is not taxed at 33% in full. The first KRW 300 million bears 22% and only the excess bears 33%, so a KRW 1 billion prize has an effective rate of 29.7%. The table and calculator below show each band.

Income type and separate taxation

Income Tax Act art. 21(1)(2) classifies “money or goods received by winning a lottery ticket, prize coupon or other drawing” as other income. Lottery prizes within the meaning of art. 2 of the Lottery and Lottery Fund Act are, under art. 14(3)(8)(라), separately taxed other income. Separate taxation means the prize is not added to your other income when comprehensive income is computed, so a large salary does not push the prize into a higher band and the prize does not push your other income into one.

That is as far as we verified directly. Many articles say withholding settles everything; whether you have no further obligation depends on your circumstances (for example gift tax if you give part of the prize away), so we do not assert it.

The tax minimum (과세최저한)

Income Tax Act art. 84(2) says income tax is not levied when a lottery prize is KRW 2,000,000 or less per prize. This is called the tax minimum. Two points matter:

• Above the threshold the whole amount is taxable, not only the excess. A prize of exactly KRW 2,000,000 has no withholding, but KRW 2,000,001 loses KRW 400,000 income tax and KRW 40,000 local income tax and nets KRW 1,560,001. At that edge, a larger prize can leave you with less.
• Instalment prizes are tested on their sum. The article states that when a prize is paid in instalments under the lottery laws, the “total of the instalments” is the amount compared with the threshold.

A note on terms: it is commonly described as “tax-free up to KRW 2 million”, but the article's own title is “tax minimum for other income”. This site uses the statutory term. The operator's winner guide also begins its rate table above KRW 2 million.

The KRW 2 million edge: where net payouts flip

The tax minimum is not a deduction on the excess; it is a threshold that applies to the whole prize. A prize of KRW 2,000,000 has no withholding and you receive KRW 2,000,000. At KRW 2,000,001 the whole KRW 2,000,001 bears 20% income tax plus 2% local income tax, KRW 440,000 is withheld, and you receive KRW 1,560,001. The prize is KRW 1 higher but the net is KRW 439,999 lower.

The reversal lasts until the after-tax amount climbs back to KRW 2 million. With about 78% kept, the edge is near 2,000,000 ÷ 0.78 ≈ KRW 2,564,103; truncating to the won gives these exact ranges:

• KRW 2,000,001 to 2,564,101: the net is below KRW 2 million (for example a KRW 2,200,000 prize has KRW 484,000 withheld and nets KRW 1,716,000; a KRW 2,500,000 prize has KRW 550,000 withheld and nets KRW 1,950,000).
• KRW 2,564,102: the net is exactly KRW 2,000,000.
• From KRW 2,564,103: the net exceeds KRW 2 million.

If you choose to deduct a purchase cost the taxable amount shrinks and the end of this range shifts slightly. The calculator tests your input directly and shows the same notice.

Rate bands and local income tax

Withholding rates are in Income Tax Act art. 129(1)(6). The general rate for other income is 20% (item 라). For separately taxed lottery prize income, the part above KRW 300 million is taxed at 30% (item 가). The threshold applies to the income amount after expenses, not the gross prize (see below).

Local income tax is not a separate rate table. Local Tax Act art. 103-13(1) requires the withholding agent to collect, together with the income tax, an amount equal to “10/100 of the income tax withheld”. So 20% becomes 22% and 30% becomes 33%. The operator's winner guide presents this as “22% (income tax 20% + resident tax 2%)” and “33% (income tax 30% + resident tax 3%)”; in statutory language the second component is individual local income tax.

Worked example: a KRW 500 million prize bears income tax of 300,000,000 × 20% + 200,000,000 × 30% = KRW 120 million and local income tax of KRW 12 million, KRW 132 million in total, leaving KRW 368 million.

Necessary expenses (purchase cost)

Other income equals gross receipts minus necessary expenses (art. 21(3)). Art. 37(1) lists specific expense rules for racing tickets, sports betting tickets and slot machines but not lotteries; art. 37(2) otherwise allows ordinary costs. We found no lottery-purchase item in Enforcement Decree art. 87 either.

Unverified (practice being confirmed). Operator guidance and press examples nonetheless compute tax after deducting the cost of the winning ticket (KRW 1,000 per game). For a KRW 1 billion prize, tax of KRW 296,999,670 and a net of KRW 703,000,330 match exactly a KRW 1,000 deduction. We could not open the operator FAQ itself, and we do not know how much purchase cost is accepted (the winning ticket only?) or the legal basis. The calculator therefore defaults to no deduction and lets you enter a cost to see the deducted result. The difference is at most a few hundred won.

The withholding flow

1. Claim. The winner claims at a payment point. According to the operator's winner guide the claim period is one year from the payout start date; unclaimed prizes go to the lottery fund.
2. Payer withholds. Whoever pays other income in Korea must withhold income tax (Income Tax Act art. 127(1)(6)) by applying the rate to the other-income amount when paying (art. 145(1)). Local income tax is collected at the same time (Local Tax Act art. 103-13). Which institution pays depends on the lottery; we did not verify that from statute.
3. Winner receives the net amount. The operator says winners receive the prize minus withholding, not the advertised figure. The withholding agent must issue a withholding receipt (art. 145(2)).
4. Payer remits the tax. Withheld income tax is due by the 10th of the month after the month of collection (art. 128(1); Local Tax Act art. 103-13(2) for local income tax). That duty is the payer's, not the winner's.

Net payout by prize size

Figures assume no expenses and local tax of 10% of income tax, truncating to the won at each step. An automated test verifies the same calculation.

If you choose to deduct a KRW 1,000 purchase cost, the KRW 1 billion row becomes KRW 296,999,670 withheld and KRW 703,000,330 net. Actual payouts can differ by small amounts because of rounding practice in withholding.

Net payout calculator

The calculation runs in your browser and nothing you enter is sent anywhere. It is an educational estimate for a Korean resident's prize from a Korean lottery (not Pension Lottery 720+).

International comparison

Other countries are structured differently, and results depend on where the ticket was sold and who receives it. This is an overview only, with figures given only where official sources confirmed them.

Compare the United States column pair: withholding is an advance payment and the final burden is set when you file. Korea's separate taxation fixes the rate at withholding and does not combine the prize with other income, which is the main structural difference.

Pension Lottery 720+

Pension Lottery 720+ pays in instalments, so it is excluded from this calculator. The operator's winner guide says first-prize pension winnings are subject to a “22% withholding tax” only, with no 33% rate on amounts above KRW 300 million, and that first prize is paid on the 20th of each month for 20 years (240 payments) while second prize and the bonus are paid for 10 years (120 payments). This is the operator's statement that 22% applies; we did not confirm a statutory basis. The only statute we verified is art. 84(2), which tests instalment prizes against the tax minimum using the sum of the instalments. The structure and tax of this game will be covered in a dedicated pension-lottery guide.

This is not tax advice

This page gives general information and educational estimates, not tax advice. Laws and rates change, and your result depends on your circumstances (residency, how a prize is shared, gifts). For the actual payout and your obligations, confirm with the payer and your competent tax office. Lotteries are decided by chance and no method guarantees a win. See Responsible Play if you need help.

Statutes, sources and review date

All dates are 2026-10-25. Statutes were compared with the current text at the National Law Information Center (law.go.kr).

• Income Tax Act art. 21 (other income), para. 1 item 2 and para. 3
• Income Tax Act art. 14 (tax base), para. 3 item 8 (라)
• Income Tax Act art. 84 (tax minimum for other income), item 2
• Income Tax Act art. 129 (withholding rates), para. 1 item 6 (가) and (라)
• Income Tax Act art. 37 (expenses of other income), Enforcement Decree art. 87
• Art. 127 (withholding duty), art. 128 (remittance), art. 145 (timing and method for other income)
• Local Tax Act art. 103-13 (special collection duty)
• Lottery and Lottery Fund Act art. 2 (definitions)
• Donghaeng Lottery winner guide: rate table, Pension Lottery, claim period

Not yet verified

• The legal basis and accepted scope of deducting lottery purchase cost (practice being confirmed)
• The statutory basis for not applying 33% above KRW 300 million to Pension Lottery 720+
• Specific rules for rounding below one won in withholding
• Which institution is the actual withholding agent for each lottery type
• Italy's current levy: an ADM provision of 2020-02-21 setting 20% was confirmed through the Chamber of Deputies' 2021-04-27 report, but we could not open the ADM text or later documents, and an ADM game page still shows 12% without a date.
• Rates for individual US states, and statute numbers for Japan, Germany, France and the UK

For other countries start with Tax by country, and see Methodology and Sources for how values are verified. A Korean-language edition is available: 한국어판.