Japan Income Tax Calculator

An Introduction to Japan

The island nation of Japan is located in East Asia in between the Sea of Japan and the Pacific Ocean. It is an archipelago made up of over 6,800 islands, of which most are mountainous and some are volcanic.

Japan's market economy is the third largest in the world, behind only the United States and China. This is made possible through its well-educated workforce and the large relatively affluent population.

The majority of Japan's GDP is accounted for by the services sector, which especially includes financial services. In fact, the Tokyo Stock Exchange ranks high among the world's important centers of finance.

Secondary to services, but still vitally important to the economy is the manufacturing sector which traditionally used to be the most important pillar of its economic growth. Japan is among the leaders when it comes to the manufacture of automobiles, machine tools, optical and precision equipment, and machinery. Despite increasing competition from neighbors like China and South Korea, Japanese firms have diversified so that their manufacturing productions are spread out around the world through global value chains and foreign acquisitions.

Due to its size and location, the Japanese economy is heavily dependent on international trade. Motor vehicles, machinery, and manufactured goods are some of the key merchandise exports. China, the United States, and South Korea are some of the top export destinations.

On the other hand, mineral fuels, machinery, pharmaceuticals, and chemicals are some of the main merchandise imports of Japan. China, the United States, and Australia are the leading suppliers of goods imports.

In 2007, China overtook the United States as Japan's largest merchandise trading partner, reflecting a much greater engagement in trade and investment between the two countries.

Life in Japan

While Japan appears modern on the surface, it isn't all just city life. There's also a lot of traditional culture you can engage with by traveling in and around the various lands that make up Japan.

Japan is a volcanic archipelago with a long and slender structure. Mountainous terrain and bubbling hot springs dot the landscape. During the warmer months, there is excellent hiking through areas passing cedar groves, fields of beautiful wildflowers along with soaring mountain peaks and ancient shrines. When the snow comes around in the more northern areas, winter sports are popular. In the southern corners, there are tropical beaches for snorkeling and diving.

A great meal is never far away in Japan. Through its history, a great variety of regional dishes have developed within the cuisine of Japan. They can range from the hotpots of the mountains to the delicate sushi that the coast is famous for. There are even restaurants that often specialize in just a single dish with them involved in the entire process from farm to table. Famous for its four seasons, many establishments takes full advantage of the seasonal variety to offer different dishes with new tastes throughout the year.

Getting around isn't an issue at all in Japan. Entire trips are possible using just public transportation. The shinkansen network, which refers to the bullet train, runs all the way from the southern tip of Kyushu up to Hokkaido. Reasonably priced rail passes make it affordable. Major cities have subway networks that are signposted even in English.

Frequently Asked Questions

What is the income tax rate in Japan?

The individual income tax rate in Japan is progressive and ranges from 5% to 45% depending on your income for residents while non-residents are taxed at a flat rate of around 20%. This income tax calculator can help estimate your average income tax rate and your take home pay.

How many income tax brackets are there in Japan?

The income tax system in Japan has seven different tax brackets for residents. For more details, check out our detail section.

Japan Income Tax Brackets and Other Information

For resident taxpayers, the income tax system in Japan is a progressive tax system. This means that your income is split into multiple brackets where lower brackets are taxed at lower rates and higher brackets are taxed at higher rates. Tax rates range from 5% to 45%.

Both standard deductions and personal exemptions exist to help lower your taxable income and the amounts for these vary based on your income. Depending on your situation, there may be many other deductions available as well with some including deductions for certain business expenses, some life insurance premiums, certain charitable contributions, and the number of dependents, among others.

Resident taxpayers are also liable for local prefectural and municipal government income tax which is composed of both a percentage and fixed component. Since this local inhabitant tax doesn't vary too much, our calculator simply uses the standard rate.

Non-resident taxpayers are taxed at a flat rate of around 20% and are generally not eligible for any deductions.

For both residents and non-residents, a surtax is also applied as a small percentage of the final income tax.

Social Security in Japan

Social security in Japan for normal employees working for a company consists of health insurance (健康保険, kenkou hoken), welfare pension (厚生年金, kosei nenkin), and unemployment insurance (雇用保険, koyou hoken). Together, the system is known as 社会保険 (shakai hoken).

Contributions are shared between employers and employees. The following details are only about the portion paid by employees.

Health insurance contribution rates average just under 5%. They vary a little bit depending on your prefecture and are slightly higher for those over 40 years of age.

Welfare pension contribution rates are around 9% and unemployment insurance contribution rates are under 1%.

There are maximum caps for the income that is considered in contributions for health insurance and welfare pension. These caps differ between normal salary income and income in the form of bonuses.

For residents, contributions to social security can act as deductions when calculating your income tax. While non-residents still have to contribute to social security, they cannot deduct social security contributions.

Those that are self employed see a slightly different system with different rates. For example, health insurance would instead be under the National Health Insurance system (国民健康保険, kokumin kenkou hoken). That said, the details of that system are beyond the scope of our calculator which is focused on normal employment.

Resident status and income tax in Japan

Permanent resident taxpayers are subject to tax on worldwide income. Non-permanent resident taxpayers and non-resident taxpayers are subject to tax only on their Japan-sourced income with the former also being taxed on their foreign-sourced income that is paid into or remitted to Japan too.

An individual is considered to be a resident for tax purposes when they have had a "juusho" (住所, residence) in Japan or has maintained a "kyosho" (居所, temporary place of abode) in Japan for a period of one year or more. Otherwise, they are considered to be a non-resident for tax purposes.

For foreign nationals, resident taxpayers can then be further classified into permanent residents and non-permanent residents for tax purposes. Those with an aggregate stay in Japan between one and five years within the last ten years are considered non-permanent resident taxpayers. On the other hand, those with an aggregate stay of more than five years within the last ten years are considered permanent resident taxpayers.