Income Tax in Japan: An Overview

What is Income Tax in Japan?

Income tax (所得税 - shotokuzei) in Japan is a progressive tax system levied on an individual's annual income. Both Japanese residents and non-residents are subject to income tax, though the specific rules and rates may differ based on residency status.

Contrary to popular belief, income tax in Japan is not excessively high compared to other countries, and follows a similar method of progressive taxation the higher your income.

Figure out how much total tax you'll owe in Japan. Try our simple calculator →

Income Tax Rates

Japan uses a progressive tax rate system, with rates increasing as income increases. Here are the current brackets:

Taxable Income (JPY)	Tax Rate	Base Deduction Amount
¥1,000 - ¥1,949,000	5%	¥0
¥1,950,000 - ¥3,299,000	10%	¥97,500
¥3,300,000 - ¥6,949,000	20%	¥427,500
¥6,950,000 - ¥8,999,000	23%	¥636,000
¥9,000,000 - ¥17,999,000	33%	¥1,536,000
¥18,000,000 - ¥39,999,000	40%	¥2,796,000
¥40,000,000+	45%	¥4,796,000

Tax Calculation Example for ¥5,000,000 Annual Income:

Income falls in the 20% bracket (¥3,300,000 - ¥6,949,000)
Tax calculation: ¥5,000,000 × 20% = ¥1,000,000
Subtract base deduction: ¥427,500
Base income tax: ¥572,500 (¥1,000,000 - ¥427,500)

Common Deductions

Japan offers several deductions that can reduce your taxable income:

Basic Deduction: ¥480,000 per person
Spouse Deduction: Up to ¥380,000 if spouse's income is below threshold
Employment Income Deduction: Varies based on salary
Social Insurance Deduction: Full amount of premiums paid
Medical Expense Deduction: Medical expenses exceeding ¥100,000

Tax Filing Requirements

Most employees in Japan don't need to file a tax return if they have a single employer who handles year-end tax adjustment (年末調整 - nenmatsu chosei). However, you must file if:

Your annual income exceeds ¥20,000,000
You have multiple sources of income
You're self-employed or run a business
You want to claim additional deductions