Income Tax
所得税 (Shotoku-zei)
Japan's national income tax is progressive — the more you earn, the higher rate you pay on each additional slice of income. But you never pay the top rate on your entire income, only on the portion that falls in each bracket.
"Think of your income as a stack of pancakes. The government takes a small bite from the bottom ones and a bigger bite from the top ones — but the bottom pancakes stay the same no matter how tall the stack gets."
Each bracket is an independent layer. If your taxable income is ¥8M, you pay 5% on the first ¥1.95M, 10% on the next slice, 20% on the next, and so on — not 23% on the whole ¥8M.
| Taxable Income | Rate | Deduction Constant | Effective on This Slice |
|---|---|---|---|
| ¥0 – ¥1,950,000 | 5% | ¥0 | First layer — minimum rate |
| ¥1,950,001 – ¥3,300,000 | 10% | ¥97,500 | |
| ¥3,300,001 – ¥6,950,000 | 20% | ¥427,500 | |
| ¥6,950,001 – ¥9,000,000 | 23% | ¥636,000 | |
| ¥9,000,001 – ¥18,000,000 | 33% | ¥1,536,000 | |
| ¥18,000,001 – ¥40,000,000 | 40% | ¥2,796,000 | |
| Over ¥40,000,000 | 45% | ¥4,796,000 | Top rate |
On top of normal income tax, Japan adds a 2.1% reconstruction surtax to fund recovery from the 2011 Great East Japan Earthquake. This is applied to your calculated income tax amount, not your income directly.
Formula: Reconstruction Tax = Income Tax × 2.1%
Total Income Tax Payable = Income Tax + Reconstruction Tax = Income Tax × 1.021
This surtax runs from 2013 to 2037. After 2037 it will be eliminated (but a separate securities tax increase is planned to compensate for defense spending).
This is the government's flat allowance for employee work expenses — no receipts needed.
| Gross Income | Deduction Amount |
|---|---|
| Up to ¥1,625,000 | ¥550,000 (flat) |
| ¥1,625,001 – ¥1,800,000 | Income × 40% − ¥100,000 |
| ¥1,800,001 – ¥3,600,000 | Income × 30% + ¥80,000 |
| ¥3,600,001 – ¥6,600,000 | Income × 20% + ¥440,000 |
| ¥6,600,001 – ¥8,500,000 | Income × 10% + ¥1,100,000 |
| Over ¥8,500,000 | ¥1,950,000 (capped) |
Employers withhold estimated income tax from every paycheck. In December (or January), they do a year-end adjustment (年末調整) and either refund or collect the difference. Most employees never need to file a tax return.
You must file a tax return if you:
• Have income over ¥20M
• Have side income (副業) over ¥200,000 per year
• Are a freelancer or sole proprietor
• Want to claim a deduction your employer didn't handle
Tax return filing period: February 16 – March 15 for the previous calendar year. You can file via e-Tax (online) which is faster and unlocks the higher Blue Return deduction.
If you lived in Japan for less than 1 year (non-resident), only Japan-sourced income is taxed. Once you've been in Japan for 1+ years, you become a resident taxpayer and worldwide income applies.