Japan’s tax year runs from January 1 to December 31, and income tax is payable at the national, prefectural, and municipal levels.
Foreign taxpayers fall into one of three possible categories:
Your status determines the extent to which income from abroad is taxable in Japan. Your total taxes paid (both in your home country and Japan) are governed by bilateral tax treaties to avoid double taxation.
Japan operates a progressive tax system where your tax rate increases with your income. As of 2026, the national tax brackets range from 5% to 45%. Additionally, a Special Reconstruction Income Tax surcharge of 2.1% is applied to the calculated national tax amount (scheduled to remain in effect until 2037).
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For example, a single taxpayer with a taxable income of ¥5.6 million would fall into the 20% tax bracket. Their base national tax would be calculated as (¥5.6 million x 20%) – ¥427,500 = ¥692,500. After adding the 2.1% reconstruction surcharge (¥14,542), the total national tax is ¥707,042.
Taxable income is your gross salary minus various legal deductions. The primary deduction for employees is the Employment Income Deduction, which serves as a standardized “expense” allowance. Furthermore, as of 2026, all taxpayers are entitled to a Basic Deduction of ¥430,000 (provided their income is under ¥24 million).
One of the most significant deductions often overlooked is Social Insurance. All premiums paid for health insurance, nursing care insurance, and the national or employee pension are 100% tax-deductible. These premiums typically amount to roughly 15% of your gross income, significantly lowering your taxable base.
If your spouse earns less than ¥1.03 million annually, they are considered a dependent for tax purposes, and you can claim a Spousal Deduction of ¥380,000. However, since 2018, there is an income cap for the main earner. If your annual income exceeds ¥9 million, the deduction begins to taper off; if it exceeds ¥10 million, you are ineligible for this deduction entirely.
Following changes to simplify child support, children under the age of 16 no longer qualify for a tax deduction, as they are covered by child benefit payments. For children aged 16 to 22, the deduction ranges from ¥380,000 to ¥630,000, depending on their age and student status.
The Furusato Nozei system is perhaps the most popular tax-saving strategy in Japan. It allows you to “donate” a portion of your residence tax to a municipality of your choice. In return, the municipality sends you a “thank you gift” (such as local produce, meat, or travel vouchers). In practice, you pay ¥2,000 out of pocket, and the rest of your donation is credited back to you as a reduction in your residence tax the following year.
Residence tax (jūmin-zei, 住民税) is calculated at a flat rate of 10% (6% prefectural; 4% municipal) of your prior year’s taxable income. Because this tax is billed based on the previous year’s earnings, residents often face a significant financial shock in their second year in Japan when the bills for their first year of income arrive.
Most salaried employees have their taxes managed by their employer through a Year-End Adjustment (Nenmatsu Chosei) in December. However, you must file a Final Tax Return (Kakutei Shinkoku) at your local tax office between February 16 and March 15 if: