Power Factor (PF) plays a critical role in determining the efficiency of electrical systems, directly impacting energy losses, system stability, and operational costs. Poor PF conditions lead to increased reactive power, reduced efficiency, and potential penalties in industrial and commercial setups. Traditional PF correction techniques, such as fixed capacitor banks, suffer from inefficiencies due to their inability to dynamically adjust to load variations. This paper presents a smart, IoT-driven PF monitoring and correction system that integrates real-time sensor data acquisition with adaptive capacitor switching to optimize energy efficiency. The system utilizes ESP32 microcontrollers, SCT013 current sensors, and ZMPT101B voltage sensors to provide continuous monitoring, while relay-controlled capacitor banks ensure dynamic correction. Through an experimental setup, the proposed method demonstrates a notable improvement in PF to 0.98, significantly reducing energy losses and improving system reliability. Compared to traditional correction methods, the system achieves faster response times and greater adaptability to fluctuating load conditions, making it suitable for residential, commercial, and industrial applications. This research further explores the mathematical modeling, hard-ware architecture, and experimental validation of the proposed system while benchmarking its efficiency against existing PF correction techniques. The findings underscore the importance of IoT and automated control strategies in modern smart grid and energy management solutions.