Employee taxes in Japan
Payroll deductions, year-end adjustment, resident tax, deductions, refunds, and when you must file.
As an employee, income tax and social insurance are withheld from each payslip and reconciled by year-end adjustment; resident tax is billed the next year; and you only file a return for side income, medical expenses, the first mortgage year, or a mid-year job exit.
Effective: 2026-01-01 to 2026-12-31
Professional review pending — treat as draft and confirm with the authorities.
Key points
- Income tax and social insurance are withheld from each payslip.
- Year-end adjustment reconciles most employees’ income tax.
- Resident tax (~10%) is billed the following year.
- File a return for side income, medical costs, the first mortgage year, or a mid-year exit.
What comes out of your pay
Each payslip deducts employee health insurance, employee pension, employment insurance, nursing-care insurance where applicable, national income-tax withholding, and (once you have a prior-year assessment) resident tax. Taxable salary and social-insurance remuneration are not identical, so the figures rarely match line for line.
When employees still file
Year-end adjustment covers the salary your employer paid, but it cannot cover side income above ¥200,000, a second unadjusted job, rental or investment income, the medical deduction, donations beyond one-stop, or the first mortgage-credit year. In those cases you file a return that starts from your withholding certificate. Leaving a job before year-end usually means filing for a refund.
Who this is for
- Salaried employees
- People with a payslip and side income
What this is not
- Full-time freelancers
- A year-end adjustment does not cure unreported side, rental, overseas, or investment income.
Frequently asked questions
Do I need to file a tax return in Japan?
Many employees do not, because tax is settled by year-end adjustment (年末調整). You generally must file (確定申告) if you have side income over ¥200,000, two or more employers, self-employment income, sizeable investment or crypto gains, or you want to claim deductions like large medical costs or a first-year mortgage credit. Filing season is Feb 16 – Mar 15 via e-Tax. When unsure, check the NTA guidance or ask a 税理士.
Why did I get a big resident tax bill in my second year?
Resident tax (住民税, about 10%) is charged the year after the income is earned, based on the previous year’s income. So in your first year you often pay little, and in your second year you get a bill for your full first-year income. The same lag means people who stop working or leave Japan can still owe resident tax afterward. Budget for it in advance.