The Atarashift Blog
Insights for working in Japan
Guides, interviews, and honest advice for international talent building a career in Japan.
The Atarashift Blog
Guides, interviews, and honest advice for international talent building a career in Japan.
Japanese income tax runs 5% to 45%, plus 10% residence tax and around 15% social insurance. The residence tax lag is what catches foreign employees out.
Expect roughly 20% to 30% of a typical salary to disappear before it reaches your account. Expect the shape of that deduction to change sharply in your second year. Japanese payroll takes national income tax at 5% to 45%, local residence tax at a flat 10%, and social insurance premiums of around 15%. The last two behave in ways that surprise almost every new arrival.
The single most common shock has nothing to do with the rates. Residence tax is billed a year in arrears, so your first year in Japan looks cheap and your second year does not. People who budget from their first payslip get caught, every time.
Key Takeaways
- National income tax is progressive from 5% to 45%, plus a 2.1% reconstruction surtax on the tax amount.
- Residence tax is a flat 10% billed on last year's income, which is why year two costs more than year one.
- Social insurance takes roughly 15% of salary from the employee, with the employer matching it.
- How much of your worldwide income Japan can tax depends on which of three residency categories you fall into, based on how long you've been here.
- The 2026 reform raised the tax-free threshold to ¥1.78 million for income tax, though residence tax follows different numbers.
National income tax runs across seven progressive brackets. They start at 5% on the first ¥1.95 million of taxable income and reach 45% above ¥40 million (PwC, Japan Individual Taxes on Personal Income, 2026).
| Taxable income (JPY) | Rate |
|---|---|
| Up to 1,950,000 | 5% |
| 1,950,001 to 3,300,000 | 10% |
| 3,300,001 to 6,950,000 | 20% |
| 6,950,001 to 9,000,000 | 23% |
| 9,000,001 to 18,000,000 | 33% |
| 18,000,001 to 40,000,000 | 40% |
| Over 40,000,000 | 45% |
Two things about that table trip people up.
These are marginal rates, applied to taxable income, not to your salary. Taxable income is what remains after the employment income deduction and the basic deduction, among others. Someone on ¥6 million gross does not pay 20% of ¥6 million.
A surtax sits on top. The Special Income Tax for Reconstruction adds 2.1% of your income tax amount, not 2.1% of your income. It has applied since 2013. From January 2027 the rate drops to 1.1%. A new 1% Special Income Tax for Defence takes its place, so the combined figure stays at 2.1% (BDO, Japan 2026 Tax Reform, 2026).
Because it's assessed on the previous calendar year's income and billed the following June. Residence tax (住民税) is a flat 10%, split between your prefecture and municipality. It's charged to whoever was registered as a resident on 1 January. On top sit a per-capita levy of roughly ¥5,000 and a ¥1,000 forest environment tax (PwC, 2026).
Work through what that timing means:
This catches people who signed a lease or set a savings plan based on that first-year payslip. If you arrived within the last twelve months, assume your net pay will fall next June and plan around it now.
The lag has a nastier edge when you leave Japan. Residence tax you owe on income already earned doesn't vanish because you moved away. Leave mid-year and your municipality still wants the balance. It's usually taken as a lump sum from your final pay, or through a tax agent (納税管理人) you appoint before you go.
Japan sorts foreign taxpayers into three categories, and the category decides how much of your worldwide income is exposed. This is the part that matters most if you have income outside Japan.
| Category | Who you are | What Japan taxes |
|---|---|---|
| Non-resident | In Japan under 1 year, no domicile | Japan-sourced income only, at a flat 20.42% |
| Non-permanent resident | Resident, but Japanese domicile or residence for 5 years or less within the last 10 | Japan-sourced income, plus foreign income paid in or remitted to Japan |
| Permanent resident (for tax) | Resident for more than 5 years within the last 10 | Worldwide income |
The five-year line is the one to watch. For your first five years you can hold foreign investments, rental income, or savings abroad without Japan taxing them, provided you don't remit the money into Japan. Cross that threshold and your global income becomes reportable.
Note that "permanent resident" here is a tax concept and has nothing to do with the immigration status of the same name. You can be a tax-permanent-resident years before you'd qualify for immigration permanent residency, and the two are assessed by different agencies against different rules.
Roughly 15% of your salary, matched by your employer. Social insurance is deducted alongside tax and is usually the larger line on a mid-range payslip.
| Contribution | Employee share |
|---|---|
| Employees' pension | 9.15% |
| Health insurance (Tokyo rate) | About 4.93% |
| Employment insurance | 0.5% |
| Long-term care (ages 40 to 64 only) | About 0.81% |
The pension rate is fixed nationally at 18.3% and split evenly, so 9.15% each. Health insurance varies by prefecture and is also split evenly. Both are calculated on a standard monthly remuneration figure rather than your exact salary. The pension calculation is also capped, which is why very high earners pay a smaller percentage overall.
Two points worth knowing. If you leave Japan permanently, you may be able to claim a lump-sum withdrawal payment against your pension contributions, though it's capped and taxed. And if you're aged 40 to 64 you pay long-term care insurance on top, which is easy to miss when comparing payslips with a younger colleague.
Our explainer on shakai hoken for foreign employees covers what these premiums actually buy you and how enrolment works.
Rates in a table are abstract. Here's the arithmetic on a ¥6,000,000 gross salary for a single employee under 40 in Tokyo, with no dependants, using the published 2026 rates.
| Line | Amount |
|---|---|
| Gross annual salary | ¥6,000,000 |
| Social insurance (employee share) | about ¥875,000 |
| Employment income deduction | ¥1,640,000 |
| Basic deduction (income tax) | ¥620,000 |
| Taxable income for income tax | about ¥2,865,000 |
| National income tax including surtax | about ¥193,000 |
| Residence tax at 10% plus per-capita levies | about ¥312,000 |
| Total deducted | about ¥1,380,000 |
| Approximate take-home | about ¥4,620,000 |
That lands at roughly 77% of gross, so about 23% goes to tax and insurance combined. Social insurance is the biggest single line, larger than income tax and residence tax individually.
Treat this as an illustration rather than a quote. Your figure moves with your prefecture's health insurance rate, your age, your dependants, and how your bonus is structured. Deductions the year-end adjustment misses will shift it too.
One caveat that matters more than the rest. In your first year the residence tax line is zero, so the same salary nets closer to ¥4,930,000. That gap of roughly ¥310,000 is the year-two drop described above. It's why a first-year payslip makes a poor basis for a lease or a savings plan.
The tax-free threshold for salaried employees rose to ¥1.78 million. The basic exemption went from ¥580,000 to ¥620,000. The minimum employment income deduction went from ¥650,000 to ¥740,000. Both figures include temporary supplements that apply for 2026 and 2027 (BDO, 2026).
There's a wrinkle that matters if you're checking your own payslip. The revision applies to income tax only. The residence tax basic exemption stays at ¥430,000, so the two taxes now run on different numbers and your withholding reflects that mismatch.
For most full-time employees on a normal salary, the practical effect is modest, worth a few tens of thousands of yen a year. It matters far more for part-time and lower-income earners, and for anyone whose spouse works part-time around a threshold.
Usually not. If you're a regular employee with one employer, your company runs a year-end adjustment (年末調整) each December. It reconciles your withholding, and that's the end of it.
You do need to file your own return (確定申告), between mid-February and mid-March, if any of these apply:
Worth knowing: filing voluntarily sometimes puts money back in your pocket. Medical expenses above ¥100,000 in a year are a common one. So are deductions your employer didn't capture. People leave both unclaimed simply because nobody told them the return existed.
The same as Japanese nationals in the same circumstances. Nationality doesn't change your rates. What differs is your tax residency category. It decides whether Japan taxes only your Japan-sourced income or your worldwide income, based on how long you've lived here.
Residence tax. It's charged at 10% on the previous year's income and starts being deducted from June of the year after you first earn in Japan. Your first year carries no residence tax, so year two typically drops net pay by around 10% with no change to your job.
It depends on your residency category. For your first five years as a non-permanent resident, Japan taxes foreign income only if it's paid in Japan or remitted here. After five years of residence within a ten-year window, your worldwide income becomes taxable.
A surcharge of 2.1% applied to your income tax amount, not your income, in place since 2013. From January 2027 it falls to 1.1%, with a new 1% Special Income Tax for Defence introduced alongside it, keeping the combined rate at 2.1%.
Sometimes. You may claim a lump-sum withdrawal payment on your pension contributions after leaving, subject to caps and withholding. Separately, departing mid-year often means you've overpaid income tax. Appointing a tax agent before you go lets you file for that refund and settle any residence tax you still owe.
Budget for roughly 20% to 30% of gross salary going to income tax, residence tax, and social insurance combined. Your exact figure depends on income, age, and prefecture.
Then plan for the two structural quirks that catch foreign employees. Residence tax arrives a year late, so your second June is when your real net pay reveals itself. And the five-year residency line changes what Japan can tax, which matters enormously if you hold assets or income abroad.
Weighing an offer against these numbers? Our breakdown of realistic salaries for foreigners in Japan gives the gross side. Our Tokyo cost of living guide covers where the rest of it goes.
Sources
This article is general information, not tax advice. For your own circumstances, consult a licensed tax accountant (税理士) or your local tax office.
Japanese paid leave is a legal right, not a favour. Take-up hit a record 66.9% in 2024, and your employer is legally required to make you use 5 days.
Japan's standard permanent residency route takes 10 years, but most people qualify sooner. A February 2026 rule change creates a 31 March 2027 deadline.
You don't transfer a Japanese work visa. Your status stays valid, but you must notify immigration within 14 days or face a fine of up to ¥200,000.
