Lee Ki-ho, a Korean government policy maker, has said the government plans to cut income and local taxes by more than 10%.
The W650 billion ($506 million) cut could affect six million wage earners and self-employed businessmen, reported The South China Morning Post.
The reduction follows calls by the country's central bank and economists for steps to boost consumption. South Korea's industrial output and exports have fallen steeply this year as the Japanese economy continues to suffer and as US growth slows.
The Korean government is also likely cut the capital gains tax on real estate next year as part of efforts to stimulate the property market and the construction industry.
