Taxes

How to file your income tax in Japan in 2024

Learn about income tax in Japan, including the latest national and local tax brackets for employees, and get advice on how to file an annual tax return.

Japan income tax
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By Stephen Maunder

Updated 18-3-2024

If you’re living and working in Japan (日本, Nihon/Nippon), it’s highly likely that you’ll need to pay income tax (所得税, shotoku zei). Calculating your tax (税金, zeikin) burden can be complicated, with a range of different allowances and deductions available. Read on to get to grips with the Japanese income tax system (所得税制度, shotokuzei seido), including advice on the following:

Income tax in Japan: who, what, why

The income tax system in Japan

The Japanese tax system is overseen by the National Tax Agency (国税庁 Kokuzei Cho), which is part of the Ministry of Finance (財務省 Zaimu Sho). The tax year runs from 1 January to 31 December, with tax returns (確定申告 kakutei shinkoku) due the following spring.

Building of the Japanese Ministry of Finance
Ministry of Finance of Japan (Photo: Wiki Commons)

If you work for a company or are self-employed, you’ll need to pay tax on your earnings (収入, shunyu). Income tax is levied at national, prefectural (regional), and municipal levels. Your residency status and how much you earn determine the rate you’ll pay. Most workers in Japan have their income tax withheld at source by their employer (雇用主, koyo nushi), meaning they don’t need to file an annual tax return.

To file a tax return and pay tax in Japan, you’ll need an Individual Number (個人番号 kojin bango) – a 12-digit ID number issued to all residents and citizens of Japan. This is sometimes known as a My Number (マイナンバー mai namba).

Who pays income tax in Japan?

Your income tax liability in Japan depends on your residency status. All workers are classified in one of the following three groups for tax purposes.

  • Permanent resident (永住者, eijusha): You have lived in Japan for at least five years or have the intention of living in Japan permanently. You’ll need to pay Japanese income tax on your worldwide income.
  • Non-permanent resident (非永住者, hi eijusha): You have lived in Japan for less than five years and don’t intend to stay permanently. You’ll need to pay tax on income earned in Japan and any income earned elsewhere that is paid in or sent to Japan.
  • Non-resident (非居住者, hi kyojusha): You have lived in Japan for less than a year and don’t have a primary address in the country. Japanese tax is only payable on income earned in Japan.

The biggest difference between these statuses is that non-residents must pay tax on their income at a flat rate, which is not subject to any deductions. Permanent and non-permanent residents, however, pay tax at incremental rates, which we’ll outline later in this article.

Earnings subject to income tax in Japan

Taxes on income and salary in Japan

  • Employment income: workers in Japan pay income tax on their earnings. There are seven income tax brackets, ranging from 5% to 45%.
  • Self-employed income: self-employed workers and freelancers pay national income tax at the same rates as employees. However, rather than paying income tax at prefectural and municipal level, they pay an ‘enterprise’ tax, which is based on their income and type of business.
  • Business income: most companies in Japan pay corporate tax at an effective rate of 30.62%. This encompasses the standard tax rate of 23.2%, local taxes, enterprise taxes and inhabitants’ tax.
School teacher in front of a blackboard
Photo: Getty Images

Taxes on employment benefits

Some employment benefits in kind, such as private use of company cars, private medical insurance, and tuition for dependent children must be included as part of your employment income for tax purposes.

There are some exclusions, however, including moving (転勤, tenkin) expenses and home-leave expenses.

Taxes on savings and investments

Interest paid on bank deposits, dividends paid by corporations listed on an exchange, and interest on bonds listed on an exchange, are taxed at 20.32%. However, interest on other forms of dividends and interest paid by offshore financial institutions are taxed at gradual income rates. Capital losses for the sale of publicly traded shares and some bonds can be offset against dividends for tax purposes.

Taxes on rental income

Income derived from renting out your property (不動産, fudosan) in Japan is counted as part of your overall income when you file your Japanese tax return, and is thus taxed at the same rates as employment income. Income tax on rental gains is charged at a flat rate of 20.42% for non-residents, and deductions are not permitted.

How to file your tax return in Japan

If you are employed in Japan, you’ll usually be subject to a withholding tax system, where your taxes will be subtracted directly from your wages (賃金, chingin). This means workers only need to file a tax return if one of the following rules applies to them:

  • You earn more than ¥20 million in a year
  • You have a side income (副収入, fuku shunyu) of more than ¥200,000 in a year
  • You have more than one employer
  • Your employer is based outside of Japan
  • You leave Japan before the end of the tax year
Bakery employee making sausage rolls
Photo: Getty Images

Retired residents are not required to file a return if their earnings from public pensions amount to less than ¥4 million per year, their pension is already subject to withholding tax, or their overall income is less than ¥200,000 per year.

Unlike in some other countries, Japanese tax returns can only be filed individually – there are no joint returns for couples.

Income tax deadlines in Japan

If you do need to file a tax return, you’ll need to submit it during a set window. This usually runs from 16 February to 15 March. You can file your tax return online using the e-Tax system (website in Japanese), by post, or in person at your local tax office (税務署 Zeimu Sho), where you can receive assistance filling out the forms if you do not speak Japanese. The Tax Office website also offers handy PDF guide with instructions on how to file your return in various foreign languages such as English, Chinese, and Portuguese.

The payment of any tax owed is due by the return deadline (for example 15 March 2023 for 2022 tax returns), though residents who pay by automatic bank transfer can benefit from a later deadline of mid-April.

If you file an income tax return every year, you’ll need to make prepayments in July and November. These are calculated based on the previous year’s income. In practice, this means you’ll have already paid most of your tax by the time the deadline comes around. If you’ve just moved to Japan, you won’t make prepayments in the first year, as there’ll be no income to base the calculations on.

In addition to national income tax, you’ll need to pay local inhabitant’s tax (住民税, jumin zei) to your prefecture (市区町村, shi ku cho son) and municipality (自治体, jichitai). This is payable in quarterly installments after the tax return deadline. So if you filed your tax return for 2022 in March 2023, you’ll make 2022’s contributions in June, August, and October 2023, and then January 2024.

You can pay any taxes due by bank transfer, direct debit, via an ATM, via credit card (subject to a fee), or in cash at your local tax office.

Income tax forms in Japan

There are two tax return forms in Japan. Form A (確定申告書A, kakutei shinkoku sho A) is suitable for those who only have income from employment, pensions and dividends to declare.

Japanese income tax form
Japanese tax return Form A – Photo: Getty Images

People who have different declarations to make, for example capital gains from real estate, should use Form B (確定申告書B, kakutei shinkoku sho B). You can find more details about both forms on the National Tax Agency’s website.

Income tax rates in Japan

Income tax rates in Japan are levied at national, prefectural and municipal levels. These are as follows:

National income tax rates in Japan

Income tax rates for residents and non-permanent residents are charged in the following brackets.

IncomeRateDeduction
Up to ¥1.95 million5%None
¥1.95m to ¥3.30m10%¥97,500
¥3.30m to ¥6.95m20%¥427,500
¥6.95m to ¥9m23%¥636,000
¥9m to ¥18m33%¥1.536m
¥18m to ¥40m40%¥2.796m
¥40m+45%¥4.796m
Note: Residents must also pay a 2.1% surcharge on their national income tax.

Local inhabitant’s tax (prefectural and municipal income tax)

Taxpayers in Japan must pay local inhabitant’s tax (地方住民税, chiho jumin zei) on top of national income tax. This is charged at 10% of your income – with 4% going to your prefectural government, and 6% to your municipal government.

Prefectural enterprise tax rate for self-employed workers

Self-employed workers pay enterprise tax instead of local inhabitant’s tax. The amount payable ranges from 3-5% depending on the type of business.

Personal tax allowance in Japan

Residents who earn less than ¥25 million are allowed a basic exemption when filing their tax return. The rates are as follows:

IncomeExemption
Up to ¥24 million¥480,000
¥24m to ¥24.5m¥320,000
¥24.5m to ¥25m¥160,000

Tax deductions in Japan

Other allowances are available to residents and non-permanent residents when filing a Japanese tax return. These include the following:

  • Employment deduction (所得控除, shotoku kojo): a standard ‘earned income’ deduction can be applied when filing your tax return. This ranges from ¥500,000 to ¥1.95 million, depending on your earnings. A formula is used to calculate the amount you can deduct. See the full guide from PwC for more details.
  • Mortgage interest (住宅ローン減税, jutaku ron genzei): interest is not deductible, but a mortgage credit may be available for up to 10 years if you meet specific conditions. If your property qualifies for the deduction, you can offset 1% of your remaining mortgage per year against your tax bill.
  • Medical expenses (医療費控除, iryohi kojo): medical costs are deductible, albeit with some limitations.
  • Social security and insurance premiums (社会保険料控除, shakai hokenryo kojo): this includes premiums for national health insurance, private health insurance, social medical insurance for the old-aged, national and employee pension insurance, and long-term care insurance.
  • Life insurance premiums (生命保険控除, seimei hoken kojo): includes life insurance policies, long-term medical care insurance, and individual annuity insurance.
  • Widows and single parents exemptions (寡婦控除/ひとり親控除, kafu kojo/hitori oya kojo): widows and single parents can claim a fixed allowance agains their tax return. In 2023, the widow allowance is ¥270,000 and the single parent allowance is ¥350,000.
  • Working student allowance (勤労学生控除, kinro gakusei kojo): this is set at ¥270,000 for working students earning up to ¥750,000.
  • Disability allowances (障害者控除, shogaisha kojo): this allowance is available for people with disabilities or those living with disabled people. It ranges from ¥270,000, to ¥400,000 for those with special disabilities.
  • Charitable contributions (寄附金控除, kifukin kojo): donations to organizations based in Japan may be tax deductible. The allowable deduction is 40% of the amount donated, minus ¥2,000.

Self-employed income tax allowances in Japan

Self-employed workers in Japan can offset expenses incurred running their business. If you work from home, you can offset a portion of your rent and utility costs. Other allowable deductions include travel expenses, the cost of entertaining clients, material costs (such as office supplies), taxes related to operating the business (such as enterprise tax), and insurance premiums.

Two men looking at a laptop screen during a business lunch meeting
Photo: Getty Images

The level of deductions you can reasonably offset will vary from business to business, so consider taking expert financial advice on your situation.

Income tax in Japan for foreigners

People with non-resident taxpayer status in Japan must pay national income tax at a flat rate of 20.42% (20% tax plus 2.1% surcharge), with no deductions available. This applies to income from earnings, dividends and real estate.

Japan has tax treaties in operation with more than 50 countries, including most of Europe, Australia the USA, UK, Canada, China, and South Korea. You can find a full list on the Ministry of Finance website.

Tax refunds in Japan

If you believe you’ll be eligible for a tax refund (還付, kanpu), you can file your return before the window opens in mid-February. The refunded sum will be transferred to the bank account (銀行口座, ginko koza) you specify on the ‘where to receive your refund’ section of your tax return.

If you don’t need to file a tax return (for example, because your tax is withheld at source by your employer), you can still file a ‘return for refund’ if you know you’ve overpaid tax. This may be the case if you have certain allowable deductions which weren’t considered when calculating the amounts withheld from your salary.

Tax fines in Japan

If you file your tax return late, you’ll need to pay a fine of 15% of the amount of tax owed. If you owe more than ¥500,000, this rises to 20%. Should your return be amended or corrected as part of an audit, you’ll need to pay a fee of 10% of the increased amount. This rises to 15% if the additional amount owed is more than ¥500,000.

If you are found to have deliberately withheld information about your taxes, you can be fined 35% to 40% of the tax owed. A further 10% is added onto these rates if you’ve already been fined for the same offence in the last five years.

Income tax advice in Japan

If you’re new to Japan or have a complicated tax situation, you may need to take advice from an English-speaking tax professional.

Woman getting tax advice from financial advisor
Photo: Getty Images

The Accounting Standards Board of Japan sets standards for accountants in Japan. This is overseen by the Japanese Financial Services Agency.

Useful resources