The hospitals in Korea face great financial and operational difficulties nowadays due to inequity in the taxation system and the health insurance system. Although the contribution of hospitals to social welfare is no less than that of other non-profit organizations, hospitals are not provided with tax incentives which other non-profit organizations normally enjoy. Besides, the reimbursements from the current health insurance system are not sufficient to recover the cost of medical services of hospitals. The purpose of this study is to investigate empirically the necessity of tax incentives for hospitals. The results of this study will have long-term governmental policy implications for the improvement of healthcare service. For empirical analysis, 10 hypotheses were established and tested on the survey data. The obligation of the government, the unfairness of the tax system, the non-profitability of the medical service, the level of quality of medical service, and the level of burden for medical service were selected as factors which affect the tax incentives for medical service. Survey questionnaires were distributed to the staffs of the medical service, the customers of the hospital, the tax experts, and tax officials The multiple regression model was used for statistical analyses. In addition, the Kruskal-Wallis test, the Scheffe`s test, and t-test were performed for categorical variables. The findings are summarized as follows: First, the obligation of the government, the unfairness, and the non-profitability of the medical service are factors which favorably induce the tax incentives for hospitals. Second, the tax officers are less favorable for the tax incentives for hospitals than the staffs of the medical service. Third, persons over the age of forty are more favorable for the tax incentives for hospitals than those in their twenties and thirties. The significance of this study is that the empirical analysis of the tax incentives for healthcare service was made for the first time, and the results of the analysis were meaningful for the improvement of healthcare service in Korea.