Starting January 1, 2026, the tax-exempt limit for childcare allowance (Q02) changes from 200,000 KRW per month to 200,000 KRW per child per month.
Going forward, for accurate tax-exempt limit calculations, you need to register children aged 6 or under in [Employee Profile] - [Family Information] in advance, or enter the correct number of children during payroll processing.
1. The tax-exempt childcare allowance limit calculation method changes due to Income Tax Act revision.
Under Article 12 of the Income Tax Act, the tax-exempt limit for childcare allowance (tax-exempt code Q02) paid for children aged 6 or under was 200,000 KRW per month regardless of the number of children until 2025. However, for allowances paid from January 1, 2026, the limit changes to 200,000 KRW per child per month. If you have multiple children aged 6 or under, the tax-exempt benefit increases.
2. Please register eligible children in the employee's family information in advance.
To automatically reflect the number of eligible children and the limit in payroll processing without manual work, please register information for children aged 6 or under who are eligible for childcare allowance in the employee's family information before payroll processing.
Go to My Profile -> [Family Information] tab, click the [Add] button at the top right, and add the family information.
Enter the deduction information for the childcare allowance eligible child.
Resident Registration Number: Only children aged 6 or under based on the attribution year can be eligible for childcare allowance.
Income Deduction Relationship: Must be registered with code 4 (Child).
Basic Deduction Dependent: Whether they are a basic deduction dependent does not affect the childcare allowance tax-exempt limit calculation. If the child is already registered as a basic deduction dependent of another person such as a spouse, please set the basic deduction dependent status to Not Applicable (OFF).
3. Payroll Processing - Paying Childcare Allowance
The following describes a feature scheduled to open in mid-January.
If you correctly registered child information in the employee's family information before starting payroll processing, you can check the [Number of Childcare Allowance Children] in [Payment Step] - [Childcare Allowance] screen.
If there is 1 eligible child, the monthly tax-exempt limit is 200,000 KRW; if there are 2, the monthly tax-exempt limit of 400,000 KRW applies.
If you did not register eligible children in the employee's family information in advance, or only registered some of multiple children, the number of childcare allowance children may not appear correctly. In this case, you can directly modify the number of children in the payroll processing to recalculate the tax-exempt limit. However, since the next payroll processing will use the employee's family information again, we recommend registering the family information in advance rather than directly modifying it in payroll processing.
FAQ
Can an admin enter child information on behalf of an employee?
Can an admin enter child information on behalf of an employee?
Go to [Employees] - [HR Information Management] - [Bulk Information Change], click [Change Information] at the top right - [Other Information Change] - [Family Information Change] or [Change with Excel] to bulk add/modify employee family information.
What is the reference date for determining childcare allowance eligibility?
What is the reference date for determining childcare allowance eligibility?
When paying childcare allowance, whether a child is aged 6 or under is determined based on January 1, the start date of the tax period (January 1 - December 31 each year).
Age criteria: Aged 6 or under based on the start of the tax period (January 1) (the date the child turns 6 and the period before).
Example: For 2025, the tax exemption applies to those born on or after January 1, 2019.