South Korea’s 2026 tax reform plan is designed to reshape domestic equity capital flows and corporate shareholder-return policies rather than provide an immediate boost to stock indexes. Finalized at a Cabinet meeting on the 1st, the package includes the Productive Finance Individual Savings Account (ISA), treasury-share tax changes, a possible framework to discourage stock-price suppression during inheritance and gifts, a production-based tax credit and a redesigned family-business inheritance deduction. The Productive Finance ISA would fully exempt interest and dividend income from investments in South Korean listed stocks, domestic equity funds, the National Growth Fund and Business Development Companies, with a total contribution limit of ₩200 million and a 10% contribution income deduction for young investors. The final proposal removed earlier restrictions on contract periods, contribution carryovers and sunset clauses, while allowing simultaneous enrollment in Youth ISA and Youth Future Savings accounts. Existing ISA features, including the annual ₩20 million contribution allowance and carryover of unused amounts, remain part of the revised framework; ordinary ISA profits up to ₩2 million, or ₩4 million for the low-income type, remain tax-free, with higher gains taxed separately at 9.9%. The treasury-share overhaul would exempt corporations from tax on gains or losses from disposals while applying deemed dividend taxation at acquisition. Alongside a March commercial law amendment requiring treasury shares to be cancelled within one year, the change could reinforce the link between buybacks, cancellations and reduced share counts. Daishin Securities analyst Lee Kyung-min said the reform should be assessed as a structural variable affecting supply, demand and valuation discipline. The plan’s estimated cumulative tax revenue impact for 2027–2031 is ₩3.443 trillion, including ₩2.1815 trillion from stronger comprehensive real estate taxation that offsets income and corporate tax cuts. The measures are unlikely to determine near-term KOSPI direction while semiconductor conditions and foreign investor flows remain influential, but potential beneficiaries include high-dividend stocks, low-PBR holding companies, financial and securities firms, domestic equity ETFs, asset managers, materials producers and manufacturers eligible for the new credits.