The Ministry of Unification announced Sunday that it would pay up to 1 billion won ($860,000) -- eclipsing the previous maximum of 250 million won.
A bill outlining the changes is set to be submitted and would offer substantial financial rewards for those able to provide intelligence and knowledge, which could enhance South Korea's security, according to the ministry.
The bill will be considered in the National Assembly between February 28 and March 9, a Unification Ministry official said.
The move comes at a time of simmering tension over South Korea's controversial THAAD missile system, which came a step closer to reality last week.
The THAAD, or Terminal High Altitude Area Defense system, is designed to shoot down short, medium and intermediate-range ballistic missiles, such as those North Korea claims to own.
South Korea reached an agreement with Lotte international
over an approved land swap last week, according to an official with the country's defense ministry.
The deal between international conglomerate Lotte and the South Korean government will allow the THAAD system to be deployed on the military's preferred site.
The US and the South Korea are planning to deploy the system by the end of this year
During his recent trip to South Korea, US Secretary of Defense James Mattis said his country was determined to defend South Korea against the "evolving North Korean threat."
But speaking at a news conference last week, China's Foreign Ministry Spokesman Geng Shuang said it would "severely disrupt regional strategic balance."
"The Chinese side has stressed repeatedly that we understand the legitimate concerns of relevant parties in safeguarding their security, however one country's security cannot be pursued at the expense of (anothers)," he said.
North Korea, China opposed
Both North Korea and China have repeatedly stated they are strongly against the deployment of THAAD.
On February 3, North Korea accused the US and South Korea of pushing the Korean peninsula to the "brink of nuclear war"
with the deployment.
In a statement, the rogue state alleged the THAAD system was part of an offensive strategy "for a preemptive attack on the North."
But Mattis said Pyongyang's aggressive behavior is why THAAD was necessary.
Meanwhile China has consistently opposed the missile system's deployment, saying it could jeopardize their "legitimate national security interests," according to Foreign Minister Wang Yi.
John Delury, associate professor of international studies at Yonsei University in Seoul, previously told CNN that Beijing was doing "everything in its power to prevent the deployment of the defense system."