Legal Tax Deductions
所得控除 & 税額控除
Japan has two types of tax breaks: income deductions (所得控除) that lower your taxable income before tax is calculated, and tax credits (税額控除) that reduce your actual tax bill directly. This guide covers every major deduction you can legally claim — many are overlooked even by long-term residents.
"An income deduction is like a coupon that makes the item cheaper before tax is applied. A tax credit is a voucher that reduces the final bill at the register. Both save you money, but credits are usually more powerful because they come off the tax itself, not just the base."
For example: a ¥100,000 income deduction at a 20% tax rate saves you ¥20,000. But a ¥100,000 tax credit saves you the full ¥100,000 — which is why Furusato Nozei and housing loan deductions are so powerful.
| Deduction | Type | Maximum Benefit | Who Can Claim |
|---|---|---|---|
| Furusato Nozei (ふるさと納税) | Tax Credit | ~¥50k–400k+ | All taxpayers |
| Housing Loan Deduction (住宅ローン控除) | Tax Credit | Up to ¥210,000/yr | Homeowners with mortgage |
| Medical Expense Deduction (医療費控除) | Income Deduction | Unlimited (>¥100k) | All taxpayers |
| Self-Medication Deduction (セルフメディケーション) | Income Deduction | Up to ¥88,000 | All taxpayers |
| Earthquake Insurance (地震保険料控除) | Income Deduction | ¥50,000 | Insurance policyholders |
| Life/Annuity Insurance (生命保険料控除) | Income Deduction | ¥120,000 combined | Insurance policyholders |
| Social Insurance (社会保険料控除) | Income Deduction | Full amount paid | All taxpayers |
| iDeCo / Small Business Pension (小規模企業共済等) | Income Deduction | Up to ¥816,000/yr | Category 1 / employees |
| Dependent Deduction (扶養控除) | Income Deduction | ¥380k–¥630k per dependent | Those supporting family |
| Spouse Deduction (配偶者控除) | Income Deduction | Up to ¥380,000 | Married taxpayers |
| Basic Exemption (基礎控除) | Income Deduction | ¥480,000 | All taxpayers (below ¥24M) |
| Employment Income Deduction (給与所得控除) | Income Deduction | Up to ¥1,950,000 | Salaried employees |
| Blue Return Deduction (青色申告特別控除) | Income Deduction | ¥650,000 | Freelancers/proprietors |
| Disability Deduction (障害者控除) | Income Deduction | ¥270k–¥750k | Disabled or caring for disabled |
| Widow/Single Parent (ひとり親・寡婦控除) | Income Deduction | ¥350,000 | Single parents under ¥5M |
| Education/Training (特定支出控除) | Income Deduction | Varies by expenses | Employees with work expenses |
| Charitable Donations (寄附金控除) | Income Deduction / Credit | 40% of donations over ¥2k | All taxpayers |
| Foreign Tax Credit (外国税額控除) | Tax Credit | Foreign tax paid | Those with overseas income |
Furusato Nozei lets you donate to any Japanese municipality and receive almost the full amount back as a resident tax credit — plus receive thank-you gifts (お礼品) worth up to 30% of your donation amount.
How it works:
1. You donate to a municipality of your choice via a Furusato Nozei portal (Rakuten, Satofull, Furunavi, etc.)
2. The municipality sends you a thank-you gift (rice, seafood, beef, sake, hotel stays, gadgets, etc.)
3. You deduct the donation from resident tax and income tax. Your net out-of-pocket cost is only ¥2,000 regardless of how much you donate.
Your donation limit depends on your income. As a rough guide:
| Annual Income (Gross) | Approx. Furusato Nozei Limit | Tax Saving After ¥2,000 Cost |
|---|---|---|
| ¥3,000,000 | ~¥28,000 | ~¥26,000 |
| ¥4,000,000 | ~¥42,000 | ~¥40,000 |
| ¥5,000,000 | ~¥61,000 | ~¥59,000 |
| ¥6,000,000 | ~¥77,000 | ~¥75,000 |
| ¥7,000,000 | ~¥108,000 | ~¥106,000 |
| ¥8,000,000 | ~¥129,000 | ~¥127,000 |
| ¥10,000,000 | ~¥180,000 | ~¥178,000 |
| ¥15,000,000 | ~¥380,000 | ~¥378,000 |
One of Japan's most powerful tax credits. If you have a mortgage on a qualifying home, you can deduct 0.7% of your year-end outstanding loan balance from your income tax (and resident tax if income tax is insufficient) for up to 13 years.
Eligibility Requirements:
• The home must be your primary residence (you live in it)
• Floor area ≥ 50m² (40m² for new energy-efficient homes purchased before 2024 deadline)
• Loan term ≥ 10 years from a financial institution
• Your income for the year ≤ ¥20M
• You move in within 6 months of completion/purchase
Credit amounts (2024+ new construction, energy-certified):
• ZEH (net-zero energy home): 0.7% × loan balance, max loan base ¥45M = up to ¥315,000/year × 13 years
• Energy-efficient: loan base ¥35M–¥40M depending on tier
• Standard new construction: loan base ¥30M
• Existing homes (used market): loan base ¥20M–¥30M depending on age and certification
Resident tax overflow: If your income tax is too low to absorb the full credit, the remainder reduces your next year's resident tax (capped at the lesser of 5% of prior year income or ¥97,500).
Premiums paid for earthquake insurance (地震保険) on your home or household goods are fully deductible up to ¥50,000 from income tax. For resident tax, the deduction is capped at ¥25,000.
At a 20% income tax rate, ¥50k deduction = ¥10,000 saved. Combined with resident tax: roughly ¥12,500–15,000 saved per year.
If you have an older long-term combined fire+earthquake policy (旧長期損害保険料) signed before 2006, a separate deduction up to ¥15,000 applies. The total cap including transitional policies is ¥50,000 combined.
Insurance premiums are deductible across three separate categories, each with its own cap:
| Category | What It Covers | Max Income Tax Deduction | Max Resident Tax Deduction |
|---|---|---|---|
| General Life Insurance (一般生命保険) | Death/disability life insurance policies | ¥40,000 | ¥28,000 |
| Annuity Insurance (個人年金保険) | Private annuity/pension insurance policies | ¥40,000 | ¥28,000 |
| Medical/Care Insurance (介護医療保険) | Long-term care and medical insurance | ¥40,000 | ¥28,000 |
Maximum combined deduction: ¥120,000 for income tax and ¥70,000 for resident tax. Even partial premiums qualify — the deduction scales with how much you pay.
If your household's total medical expenses in a year exceed ¥100,000 (or 5% of your adjusted net income if that is lower), you can deduct the excess from your income.
• No upper limit on deductible amount
• Covers: hospital bills, dental, prescriptions, ambulance fees, fertility treatment, nursing home care, crutches/wheelchairs (prescribed), contact lenses (if prescribed for eye disease)
• Keep all receipts — the 医療費控除の明細書 form lists every expense
If you don't reach the ¥100k threshold for standard medical, you can use the Self-Medication alternative: OTC drug (市販薬) purchases over ¥12,000 up to a cap of ¥100,000 are deductible — if you also had at least one preventive health check-up in the year.
You cannot combine both deductions — choose whichever is more beneficial.
Contributions to iDeCo, Small Business Mutual Aid (小規模企業共済), and employer-type DC plans are 100% deductible with no floor — every yen contributed reduces your taxable income by one yen.
Monthly contribution limits:
• iDeCo (self-employed): up to ¥68,000/month
• iDeCo (employee, no company pension): up to ¥23,000/month
• Small Business Mutual Aid (小規模企業共済): up to ¥70,000/month
Combined maximum: A self-employed person contributing ¥68k iDeCo + ¥70k 小規模企業共済 = ¥138,000/month = ¥1,656,000/year fully deductible. At 33% effective tax rate, that saves ¥546,480/year.
There is no specific deduction for sending money overseas — remittances themselves are not deductible. However, if the family members you're supporting abroad qualify as your tax dependents, you claim the dependent deduction (扶養控除) for each of them, which indirectly offsets the cost of supporting them.
What this means in practice:
• Supporting 2 overseas parents (both 70+, living separately): deduction of ¥480,000 × 2 = ¥960,000 from taxable income
• At 20% income tax + 10% resident tax: saves approximately ¥288,000/year
Documentation required:
• Proof of relationship (birth certificate, family register with certified translation)
• Annual remittance records showing you sent money (bank/Wise transfer receipts for the tax year)
• Proof they live abroad (passport, foreign residence document)
• Proof their income is below ¥480,000/year (foreign income certificate, if applicable)
Since the 2023 tax law tightening, you must now provide both relationship proof AND remittance proof every year (previously only required every few years).
Every yen you pay in social insurance premiums is 100% deductible from your taxable income. This includes:
• Your employee share of health insurance and pension (Shakai Hoken)
• Kokuho (national health insurance) premiums
• National pension (¥16,980/month)
• Long-term care insurance (if you pay directly)
For salaried employees, this is handled automatically in the year-end adjustment. Freelancers claim it on their tax return. If you pay premiums for a family member who has no income, you can claim their premiums on your return too.
| Category | Deduction Amount (Income Tax) | Deduction Amount (Resident Tax) |
|---|---|---|
| Standard Disability (普通障害者) | ¥270,000 | ¥260,000 |
| Special Disability (特別障害者) | ¥400,000 | ¥300,000 |
| Special Disability living with you (同居特別障害者) | ¥750,000 | ¥530,000 |
If you are unmarried (never married, divorced, or bereaved) with a dependent child and your total income is under ¥5M:
• Income tax deduction: ¥350,000
• Resident tax deduction: ¥300,000
Applies equally to men and women regardless of marital history — a 2020 reform that made the rules gender-neutral.
If you are a widowed or divorced woman without a dependent child (but have other dependents or had sufficient income in marriage):
• Income tax deduction: ¥270,000
• Resident tax deduction: ¥260,000
Salaried employees normally cannot deduct actual work expenses — they get the standard employment deduction instead. However, if your actual qualifying work expenses exceed half of your employment deduction amount, you can claim the excess as an additional deduction.
Qualifying expenses include:
• Commuting costs not reimbursed by employer
• Travel for business trips paid out of pocket
• Work clothing (uniforms, protective gear)
• Professional books and subscriptions required for work
• Study abroad / professional training (if employer certifies it's work-related)
• Costs of maintaining a second home for work relocation
Requirement: Your employer must issue a certificate confirming the expense was a necessary work requirement. Without this certificate, you cannot claim the deduction.
Donations to politically designated organisations and certain public interest foundations: deduct the larger of (total donations − ¥2,000) or (total donations × 40% − ¥2,000 as a credit).
Furusato Nozei is technically a donation and gives a near-full tax credit. Covered in detail in Section 1 above — the most common and most beneficial donation deduction for most taxpayers.
Most deductions are claimed via your employer's year-end adjustment (年末調整) in November–December. Submit the required forms and certificates to your HR department. Any deductions not handled by year-end adjustment (medical expenses, Furusato if not using One-Stop) require filing a tax return in February–March.
All deductions are claimed on your 確定申告 (tax return) filed February 16 – March 15. Use accounting software or e-Tax to prepare the return. Attach all supporting documents (receipts, certificates, statements).
Keep all receipts and certificates for at least 5 years (7 years for some business records). Digital copies (photos, scans) are accepted by the NTA as of 2024 under the electronic bookkeeping law (電子帳簿保存法).
The housing loan deduction must be claimed by filing a tax return in year 1 even if you are salaried. From year 2 onwards, your employer can handle it through year-end adjustment using the certificate from your mortgage lender.