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Japan's income tax system consists of national income tax (所得税) and local inhabitant tax (住民税). The system is progressive with 7 brackets from 5% to 45%. Employers withhold tax monthly, and year-end adjustments reconcile differences.
| Taxable Income (¥) | Rate | Deduction (¥) |
|---|---|---|
| 0 – 1,950,000 | 5% | 0 |
| 1,950,001 – 3,300,000 | 10% | 97,500 |
| 3,300,001 – 6,950,000 | 20% | 427,500 |
| 6,950,001 – 9,000,000 | 23% | 636,000 |
| 9,000,001 – 18,000,000 | 33% | 1,536,000 |
| 18,000,001 – 40,000,000 | 40% | 2,796,000 |
| 40,000,001+ | 45% | 4,796,000 |
The basic deduction is ¥480,000 for most taxpayers. It phases out for high earners:
Employees must contribute to multiple social insurance schemes. Total contribution is approximately 14-15% of gross salary:
| Insurance Type | Employee Rate | Annual Cap |
|---|---|---|
| Health Insurance (健康保険) | ~5% | ~¥830,000 |
| Pension (厚生年金) | 9.15% | ~¥660,000 |
| Employment Insurance (雇用保険) | 0.6% | None |
| Long-term Care (介護保険) | 0.8% | ~¥140,000 |
Local tax is 10% flat (6% prefectural + 4% municipal). It's calculated based on your previous year's income and paid in 4 installments (June, August, October, December).
Annual salary: ¥6,000,000, single, standard deductions:
For most salaried employees, the employer performs a year-end adjustment in December. This reconciles the year's withheld tax with actual liability. If you overpaid, you get a refund; if you underpaid, additional tax is withheld.
Self-employed individuals and those with income > ¥20 million must file a tax return (確定申告) by March 15.
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