Income Tax — 所得税

Income Tax

所得税 (Shotoku-zei)

Japan's national income tax is progressive — the more you earn, the higher rate you pay on each additional slice of income. But you never pay the top rate on your entire income, only on the portion that falls in each bracket.

Interactive: How Much Income Tax Will You Pay?
Income Tax Explorer
See exactly how much national income tax (所得税) leaves your pocket as gross income rises. The employee line includes the employment deduction and Shakai Hoken deduction.
Employee (Shakai Hoken)
Freelancer (Kokuho)
Adjust Income¥6.0M (¥6,000,000)
Employee (Shakai Hoken)
¥205,538
3.4% of ¥6.0M gross
Freelancer (Kokuho)
¥522,533
8.7% of ¥6.0M gross
The Simple Analogy
Simple Analogy

"Think of your income as a stack of pancakes. The government takes a small bite from the bottom ones and a bigger bite from the top ones — but the bottom pancakes stay the same no matter how tall the stack gets."

Each bracket is an independent layer. If your taxable income is ¥8M, you pay 5% on the first ¥1.95M, 10% on the next slice, 20% on the next, and so on — not 23% on the whole ¥8M.

How Your Taxable Income Is Calculated
1
Start with Gross Income
Your total income, bonus, and any other earned income before anything is deducted.
2
Subtract the Employment Income Deduction (給与所得控除)
Salaried employees receive a fixed deduction to cover work-related expenses. At ¥6M gross this is roughly ¥1.64M. Freelancers use actual business expenses instead.
3
Subtract Basic Exemption (基礎控除)
Everyone gets a ¥480,000 personal exemption (tapering off above ¥24M income).
4
Subtract Social Insurance Deduction (社会保険料控除)
The full amount you paid into health insurance and pension is deducted from taxable income.
5
Subtract Any Other Deductions
Dependent deduction, medical expenses, life insurance premiums, Blue Return allowance, etc. See the Tax Deductions page for the full list.
6
Apply the Tax Brackets
The resulting figure is your taxable income. Apply each bracket rate progressively.
7
Add Reconstruction Surtax (復興特別所得税)
Multiply your income tax by 2.1% and add it on top. This funds the 2011 Tōhoku earthquake reconstruction through 2037.
2026 Tax Brackets
Taxable IncomeRateDeduction ConstantEffective on This Slice
¥0 – ¥1,950,0005%¥0First layer — minimum rate
¥1,950,001 – ¥3,300,00010%¥97,500
¥3,300,001 – ¥6,950,00020%¥427,500
¥6,950,001 – ¥9,000,00023%¥636,000
¥9,000,001 – ¥18,000,00033%¥1,536,000
¥18,000,001 – ¥40,000,00040%¥2,796,000
Over ¥40,000,00045%¥4,796,000Top rate
How to use the table: Tax = (Taxable Income × Rate) − Deduction Constant. For example, taxable income of ¥5M: (¥5,000,000 × 20%) − ¥427,500 = ¥572,500 base income tax.
Reconstruction Surtax (復興特別所得税)

On top of normal income tax, Japan adds a 2.1% reconstruction surtax to fund recovery from the 2011 Great East Japan Earthquake. This is applied to your calculated income tax amount, not your income directly.

Formula: Reconstruction Tax = Income Tax × 2.1%
Total Income Tax Payable = Income Tax + Reconstruction Tax = Income Tax × 1.021

This surtax runs from 2013 to 2037. After 2037 it will be eliminated (but a separate securities tax increase is planned to compensate for defense spending).

Employment Income Deduction Table
Employment Income Deduction (給与所得控除)

This is the government's flat allowance for employee work expenses — no receipts needed.

Gross IncomeDeduction Amount
Up to ¥1,625,000¥550,000 (flat)
¥1,625,001 – ¥1,800,000Income × 40% − ¥100,000
¥1,800,001 – ¥3,600,000Income × 30% + ¥80,000
¥3,600,001 – ¥6,600,000Income × 20% + ¥440,000
¥6,600,001 – ¥8,500,000Income × 10% + ¥1,100,000
Over ¥8,500,000¥1,950,000 (capped)
Key Rules
Withholding (源泉徴収)

Employers withhold estimated income tax from every paycheck. In December (or January), they do a year-end adjustment (年末調整) and either refund or collect the difference. Most employees never need to file a tax return.

Who Must File (確定申告)

You must file a tax return if you:

• Have income over ¥20M

• Have side income (副業) over ¥200,000 per year

• Are a freelancer or sole proprietor

• Want to claim a deduction your employer didn't handle

Filing Deadline

Tax return filing period: February 16 – March 15 for the previous calendar year. You can file via e-Tax (online) which is faster and unlocks the higher Blue Return deduction.

Non-Residents

If you lived in Japan for less than 1 year (non-resident), only Japan-sourced income is taxed. Once you've been in Japan for 1+ years, you become a resident taxpayer and worldwide income applies.

Practical Example
¥6,000,000
Gross Income
¥1,640,000
Employment Deduction
¥1,025,400
Shakai Hoken
¥480,000
Basic Exemption
¥2,854,600
Taxable Income
¥143,420
Income Tax (excl. surtax)
At ¥6M gross (employee with Shakai Hoken), taxable income ≈ ¥2.85M, falling in the 10% bracket. Income tax ≈ ¥143k, plus ¥3k reconstruction surtax = ~¥146k total — just 2.4% of gross income.
Frequently Misunderstood
Common Misconception
"If I get a raise into a higher bracket, I'll take home less money." This is false. Bracket rates only apply to the new income above the threshold, never to the income you already earned. A raise always means more take-home pay.