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.
Allowances are 15.9% of the average Japanese pay packet, and most of them do not count toward your bonus or your overtime rate. How to read a Japanese offer.
About 15.9% of the average Japanese pay packet is allowances, not base salary. On a typical month that is ¥54,500 of ¥341,800, according to the Ministry of Health, Labour and Welfare.
That split matters more than it looks. Bonuses in Japan are usually a multiple of base salary. By law, several allowances can be left out of your overtime rate too. So two offers quoting the same annual figure can pay out very differently.
This guide covers which allowances you are likely to receive and what they are worth. It also covers the three places where they quietly do not count.
Teate (手当) are the add-ons listed separately from base salary (基本給) on your payslip. A Japanese offer of ¥5,000,000 is rarely ¥5,000,000 of base pay. It is base pay plus some combination of allowances, plus a bonus assumption.
The Ministry of Health, Labour and Welfare surveys this. For November 2024, average scheduled monthly pay broke down like this:
| Component | Monthly | Share |
|---|---|---|
| Base salary (基本給) | ¥287,300 | 84.1% |
| Allowances (諸手当) | ¥54,500 | 15.9% |
| Total scheduled pay | ¥341,800 | 100% |
Five years earlier the same survey put allowances at ¥47,500, or 14.9%. The allowance share is creeping up, not down.
Company size changes the picture in a way worth knowing before you sign:
| Company size | Scheduled pay | Allowance share |
|---|---|---|
| 1,000+ employees | ¥375,900 | 14.3% |
| 300 to 999 | ¥336,800 | 15.9% |
| 100 to 299 | ¥323,700 | 16.9% |
| 30 to 99 | ¥307,000 | 18.4% |
Smaller firms pay less overall and route more of it through teate. That is the opposite of what you want if your bonus is a multiple of base salary.
Two different questions matter here. How likely is a company to offer each allowance, and how much is it worth when they do.
Share of companies paying each type, and the average monthly amount for employees who receive it:
| Allowance | Japanese | Companies paying | Average amount |
|---|---|---|---|
| Commuting | 通勤手当 | 90.2% | ¥12,700 |
| Position / managerial | 役付手当 | 84.2% | ¥43,500 |
| Family / dependants | 家族手当・扶養手当 | 62.3% | ¥17,600 |
| Skill or qualification | 技能手当・技術手当 | 53.0% | ¥21,500 |
| Housing | 住宅手当 | 45.7% | ¥18,700 |
| Perfect attendance | 精皆勤手当 | 17.4% | ¥9,700 |
| Performance | 業績手当 | 13.7% | ¥64,100 |
| Single-posting / living apart | 単身赴任手当 | 13.2% | ¥49,300 |
| Regional | 地域手当・勤務地手当 | 11.6% | ¥26,200 |
The two columns pull in opposite directions. Commuting money is the one you are almost certain to get, and the smallest. Performance and single-posting allowances are the largest, and most people never see them.
Housing is the teate worth negotiating over. Fewer than half of companies pay one, it averages ¥18,700 a month, and at firms of 1,000 or more the share rises to 60.8%. Over a year that is more than ¥220,000.
This is the part that changes how you read an offer.
Japanese bonuses are typically quoted in months, as in "4.5 months". That multiplier is almost always applied to base salary, not to base plus allowances. An offer with a high teate component and a low base produces a smaller bonus at the same headline salary. Our guide to how the Japanese bonus system works covers the mechanics.
Seven items can be left out of the wage used to calculate overtime and premium pay. The Labour Standards Act and its enforcement regulations set the list:
That list is exhaustive. Anything not on it must be included, which is a point many employers get wrong.
There is a further condition that works in your favour. A payment only qualifies for exclusion if it varies with the individual circumstance it is named for. A housing allowance can be excluded only when it is calculated from actual housing cost. A percentage of your rent qualifies. So does a banded scheme, say ¥20,000 for rent up to ¥100,000 and ¥30,000 above it.
A flat ¥20,000 paid to everyone regardless of rent is not excludable. Neither is ¥20,000 for renters and ¥10,000 for owners. In those cases the money must be counted in your overtime base. If your employer leaves it out, your overtime is being underpaid.
Here the logic reverses, and not in your favour. The Japan Pension Service counts commuting, housing, family, position and separation allowances as remuneration (報酬) when setting your standard monthly remuneration (標準報酬月額). That figure drives your health insurance and pension premiums.
So commuting money is income-tax-free up to ¥150,000 a month, yet still raises the premiums deducted from your pay. It is the one allowance that is invisible to the tax office and fully visible to the pension office.
| Allowance | Income tax | Social insurance | Overtime base |
|---|---|---|---|
| Commuting | Exempt to ¥150,000/mo | Counted | Excludable |
| Housing | Taxable | Counted | Only if tied to actual cost |
| Family | Taxable | Counted | Excludable |
| Position | Taxable | Counted | Must be included |
For how the deductions themselves work, see our breakdowns of income tax and social insurance in Japan and shakai hoken.
Here is what the split actually costs. Both offers below pay ¥325,000 a month in gross monthly pay, and both quote a bonus of 4.5 months.
| Offer A | Offer B | |
|---|---|---|
| Base salary | ¥300,000 | ¥250,000 |
| Allowances | ¥25,000 | ¥75,000 |
| Gross monthly | ¥325,000 | ¥325,000 |
| Bonus (4.5 months of base) | ¥1,350,000 | ¥1,125,000 |
| Annual total | ¥5,250,000 | ¥5,025,000 |
Identical monthly pay, identical bonus multiplier, and a gap of ¥225,000 a year. Nothing about the work differs. Only the base-to-allowance ratio does.
The effect compounds, because most pay rises are expressed as a percentage of base salary. Offer B starts lower on base and grows from a lower number.
One thing partly offsets it. Say Offer B's housing payment is a flat amount rather than one tied to rent. By law it then has to be counted in the overtime base. An employee working regular overtime recovers some of the gap that way. That is a poor trade if you would rather not work the overtime.
Slowly, yes. The share of companies paying a family or dependants teate fell from 68.6% to 62.3% in five years. That is the largest drop of any type in the survey.
Two forces are behind it. Policy attention on the income thresholds that discourage spouses from working more hours has pushed firms to review spouse-linked payments. And many companies are shifting money from family allowances into base salary or childcare support, which spreads it more evenly across staff.
For a foreign employee the practical read is simple. If you have dependants in Japan, check whether the allowance exists before you count on it, and check whether it covers dependants living overseas. Many schemes do not.
Five questions that take a minute each and can be worth six figures a year.
What is the base salary, separately from allowances? This is the single most useful number in the offer. Ask for it in writing.
Is the bonus a multiple of base salary or of total monthly pay? Almost always base. Confirm it anyway.
Which teate am I eligible for, and are any conditional? Housing payments are often restricted to employees who are heads of household, or who live beyond a set distance from the office.
Is the housing allowance a flat amount or tied to my rent? This changes both the amount and whether it counts toward your overtime rate.
Does the family allowance cover dependants outside Japan? Relevant if your family is joining you later, or staying abroad.
Still comparing offers? Our data on what foreigners actually earn in Japan gives the ranges by industry. Our guide to negotiating salary in Japan covers how to raise these points without friction.
Teate (手当) means allowance. It is any payment listed separately from base salary, such as commuting, housing, family or position allowances. On average they make up 15.9% of scheduled monthly pay.
Not up to ¥150,000 a month for public transport, provided it reflects the most economically rational route. Anything above that is taxable. It still counts toward your social insurance premiums regardless.
Usually not. Japanese bonuses are typically a multiple of base salary alone, so a high-allowance, low-base offer produces a smaller bonus at the same headline pay.
Only if it is calculated from your actual housing cost. A flat amount paid to everyone regardless of rent must be included in the overtime base by law.
¥18,700 a month on average among employees who receive one. About 45.7% of companies pay one, rising to 60.8% at companies with 1,000 or more employees.
No. Allowances are set by company rules (就業規則), not by law, apart from the overtime and minimum wage rules that constrain how they are treated. Conditions and amounts can change, so read the wording in your employment rules.
Allowance shares, prevalence and average amounts are from the Ministry of Health, Labour and Welfare's Survey on Working Conditions (就労条件総合調査). Figures are from the 2025 edition, covering pay for November 2024, tables 16 to 18. Comparison figures labelled "five years earlier" are the 2020 edition, covering November 2019.
Prevalence percentages are the share of companies that pay allowances at all. Average amounts are per employee who receives that allowance, not per employee overall.
The overtime exclusion list comes from the Labour Standards Act Article 37 and Article 21 of its enforcement regulations. The condition on housing allowances is set out in Aichi Labour Bureau guidance (割増賃金の基礎となる賃金について).
The commuting allowance tax exemption is National Tax Agency No. 2582. The treatment of allowances as remuneration for standard monthly remuneration is per the Japan Pension Service.
Data retrieved 9 September 2026.
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