Income Tax

There are two kinds of income tax in Japan:

1. National Income Tax - charged at a progressive rate up to 45% (45.945% including the 2.1% surcharge for the Special Income Tax for Reconstruction), details below.
2. Residence Tax - charged at a flat 10%.

Both of these taxes are applied to taxable income, which is total income after applying various income deductions. Tax deductions to the final amount of tax due are also available.

National Income Tax Rates

Income tax rates are applied to taxable income after available income deductions.

For example employment income is first subject to the Employment Income Deduction.

If someone earned a salary of ¥5,550,000, the employment income deduction is first applied to give a taxable income of ¥4,000,000.

Other income deductions (e.g. Basic Deduction, Social Insurance Deduction, etc.) are further applied to this, before the final amount is then used to calculate the amount of tax due using the table below.

National Income Tax Rates

Taxable income	Tax rate	Adjustment
¥1 to ¥1,950,000	5%	¥0
¥1,950,001 to ¥3,300,000	10%	¥97,500
¥3,300,001 to ¥6,950,000	20%	¥427,500
¥6,950,001 to ¥9,000,000	30%	¥636,000
¥9,000,001 to ¥18,000,000	33%	¥1,536,000
¥18,000,001 to ¥40,000,000	40%	¥2,796,000
¥40,000,001 and greater	45%	¥4,796,000

The rates are progressive, and the adjustment can be used to simplify the calculation.

For example, someone with a taxable income of ¥4M will pay:

1. 5% on the first ¥1,950,000 (¥97500)
2. 10% on the amount from ¥1,950,001 to ¥3,300,000 (¥135,000)
3. 20% on the amount from ¥3,300,001 to ¥4,000,000 (¥140,000)
4. This gives a total income tax due of ¥372,500
5. This is the same as using the adjustment to calculate ¥4,000,000 × 20% - adjustment(¥427,500) = ¥372,500.

Special Income Tax for Reconstruction (復興特別所得税)

Between 2013 and 2037, the above tax rates are also subject to a 2.1% Surcharge for the Special Income Tax for Reconstruction. The final amount is rounded down to the nearest ¥100.

In the above example the final tax due is ¥372,500 × 102.1% = ¥380,322, rounded down to ¥380,300.

Aggregate vs Separate Taxation

In general, income is aggregated together and taxed as a single sum at the above rates (総合課税, sougou kazei), however some income can be taxed separately at pre-determined rates (分離課税, bunri kazei). For example, income from dividends when taxed separately are taxed at a rate of 15.315% for National, and 5% for Residence taxes, instead of the rates listed above.

The total amount of income for aggregate taxation is calculated annually in the end of year tax adjustment or via a tax return.

Separately-taxed income can be automatically withheld at source (源泉分離課税, gensen bunri kazei), for example tax on dividends in a tax withholding account, or declared on the tax return (申告分離課税, shinkoku bunri kazei). For some income eligible for separate taxation, it is possible to choose aggregate or separate taxation. Which one is more beneficial depends on individual circumstances. See the Types of Income and Taxation Methods, National Tax Agency (PDF) (part of the 2023 Income Tax and Special Income Tax for Reconstruction Guide) for a complete list.

Available Deductions

There are two kinds of deductions:

1. Income deductions, which reduce the amount of income that is taxable.
2. Tax deductions, which directly reduce the amount of tax due.

Name	Japanese Name	Claimable via Tax return	Claimable via EOY tax adjustment
Income Deductions
Basic Deduction	基礎控除	Yes	Yes
Spouse Deduction	配偶者控除	Yes	Yes
Dependent Deduction	扶養控除	Yes	Yes
Life Insurance Deduction	生命保険料控除	Yes	Yes
Earthquake Insurance Deduction	地震保険料控除	Yes	Yes
Small Business Mutual-Aid Etc. Deduction - includes iDeCo	小規模企業共済等掛金控除	Yes	Yes
Social Insurance Deduction	社会保険料控除	Yes	Yes
Disability Deduction	障害者控除	Yes	Yes
Single-Parent Deduction	ひとり親控除	Yes	Yes
Widow and Female Divorcee Deduction	寡婦控除	Yes	Yes
Working Student Deduction	勤労学生控除	Yes	Yes
Medical Expenses Deduction	医療費控除	Yes	No
Miscellaneous Losses Deduction	雑損控除	Yes	No
Donation Deduction - includes Furusato Nozei	寄附金控除	Yes	No
Tax Deductions
Dividend Deduction	配当控除	Yes	No
Home Loan Deduction	住宅借入金等特別控除	Yes	From the 2nd year
Special Donation Deduction	政党等寄附金等特別控除	Yes	No
Anti-earthquake Home Improvement Deduction	住宅耐震改修特別控除	Yes	No
Certified Home Improvement Deduction	住宅特定改修特別税額控除	Yes	No
Building a Home Deduction	認定住宅等新築等特別税額控除	Yes	No
Foreign Tax Deduction	外国税額控除	Yes	No

See Also

• Learn about "Income Tax", Ministry of Finance (PDF) (from Learning More About Taxes(July, 2023))
• Material on Individual Income Taxation, Ministry of Finance