National Income Tax
National Income Tax (所得税) is one of the two forms of income tax in Japan, the other being Residence Tax. It is levied on taxable income after deduction of all relevant allowances and deductions.
Most income is totalized and taxed as a single amount (aggregate taxation, 総合課税). However, it is possible for some income such as dividends to be taxed separately at fixed rates (separate taxation, 分離課税). The information in this article is about the tax rates that apply to aggregate taxation.
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.
| Taxable income[2] | 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:
- 5% on the first ¥1,950,000 (¥97500)
- 10% on the amount from ¥1,950,001 to ¥3,300,000 (¥135,000)
- 20% on the amount from ¥3,300,001 to ¥4,000,000 (¥140,000)
- This gives a total income tax due of ¥372,500
- 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.
Residence Tax
Residence tax is another form of income tax, charged at 10% of taxable income. For more details see Residence Tax.
See Also
References
- ↑ Tax Answer No.2260 所得税の税率, NTA (Japanese)
- ↑ The amount after applying income deductions, rounded down to the nearest ¥1000