Tax

Japan Personal Tax Guide — Basics of Income Tax and Resident Tax for Foreign Residents

August 26, 2026

This guide explains Japan's income tax and resident tax system for foreign residents, focusing on the crucial distinction between non-resident, non-permanent resident, and permanent resident tax status, which determines how much of your income is taxed. It also covers 2026 updates to deductions, dependent relative rules for family living abroad, and key procedures for leaving Japan, such as appointing a tax administrator.

Anyone who lives in Japan and earns income is required to pay taxes, regardless of nationality. However, the scope of taxable income changes greatly depending on "how long you have lived in Japan," so understanding the system is even more important for foreign residents than for Japanese nationals.

This article organizes the overall picture of personal taxation in Japan, focusing on the points that foreign residents commonly find confusing in practice.

About this article: This is intended for general information purposes only and is not a substitute for individual tax consultation. If you are unsure about something, please consult your local tax office or a certified tax accountant (zeirishi). The amounts stated are based on laws in effect as of August 2026 (Reiwa 8).

1. Overview of Personal Taxation in Japan

The main burdens on individual income in Japan are the following three:

When discussing taxes, social insurance premiums (health insurance, employees' pension, employment insurance) are not technically "taxes," but their impact on take-home pay is often greater than income tax, so in practice they should be understood together.

An important characteristic is that Resident Tax is levied the following year based on the previous year's income. This is why you don't pay resident tax in your first year in Japan, your take-home pay suddenly decreases from the second year, or you receive a payment notice the year after you resign or leave Japan.

2. Taxpayer Classification — The Most Important Concept for Foreign Residents

Japan's Income Tax Act divides individuals into the following three categories, each with a different scope of taxable income.

2-1. Determining Your Category

Category | Criteria | Scope of taxable income Non-resident | Anyone who is not a resident | Only Japan-source income (in principle, 20.42% withholding tax at source) Non-permanent resident | A resident who does not hold Japanese nationality and whose total period of having an address or residence in Japan within the past 10 years is 5 years or less | All Japan-source income + foreign-source income that is either "paid in Japan" or "remitted from abroad to Japan" Resident other than non-permanent resident (permanent resident) | A resident not falling under the above | Worldwide income

A "resident" refers to a person who has an address in Japan, or who has continuously had a residence in Japan for one year or more up to the present. This is determined based on the actual location of one's base of living, not the type of residence status or visa name.

2-2. What the Non-Permanent Resident System Means

For non-permanent residents, although they are residents, all foreign-source income is in principle excluded from taxation, and only when it is paid within Japan or remitted to Japan does a certain calculated portion of foreign-source income become taxable. This system is unique to Japan and is an exception to the international principle of worldwide income taxation.

One point requiring particular caution in practice is the treatment of remittances. Past tax tribunal rulings have determined that even if funds remitted from abroad are sent back overseas within the same year, this cannot be deducted from the remittance amount. This is because a remittance is treated as the trigger for exercising taxing rights, so the belief that "sending money back and forth cancels it out" is incorrect.

If you remit living expenses from an account in your home country to a Japanese account, and you have foreign-source income that year (such as rental income from property in your home country, stock dividends, or business income), taxable income can arise up to the amount remitted. If this applies to you, be sure to keep records of your remittances.

2-3. When You Exceed 5 Years

Once your cumulative period in Japan (calculated within the past 10 years) exceeds 5 years, you switch from non-permanent resident to permanent resident status, and your worldwide income becomes taxable. This is a major turning point for people who own real estate or securities accounts in their home country, and advance preparation is necessary.

3. The 10 Categories of Income

Japanese income tax divides income into 10 categories according to the nature of the income, with different calculation methods for each.

Category | Main contents Employment income | Salary and bonuses for company employees, part-timers, and temporary workers Business income | Income from sole proprietorships, freelance work Real estate income | Rental income Interest income | Interest on savings deposits Dividend income | Stock dividends, investment trust distributions Capital gains | Profits from sale of real estate, stocks, etc. Occasional income | Insurance maturity payments, prize money Miscellaneous income | Public pensions, side-business income, cryptocurrency gains Retirement income | Retirement allowance Forestry income | Logging and sale of forest land

Most salaried employees only have "employment income," but if you have side income, rental income from property in your home country, or cryptocurrency transactions, you may fall into multiple categories and need to file a final tax return.

4. Calculating Income Tax — 5 Steps ① Income amount − Necessary expenses (for salary, the employment income deduction) = Income amount ② Income amount − Income deductions = Taxable income amount ③ Taxable income amount × Tax rate = Income tax amount ④ Income tax amount − Tax credits = Base income tax amount ⑤ Base income tax amount + Special reconstruction income tax = Tax amount payable

The first point of confusion is that "income (revenue)" and "income (taxable amount)" are different things. For a company employee with an annual salary of 5 million yen, their "income" for tax purposes is not 5 million yen, but the amount after subtracting the employment income deduction.

4-1. Employment Income Deduction (Reiwa 8 / 2026)

Salaried employees are allowed a standard deduction based on income in lieu of actual expenses. Starting from the 2026 (Reiwa 8) tax year, the minimum guaranteed deduction is 740,000 yen (690,000 yen under the basic rule + a special 50,000 yen addition limited to the Reiwa 8 and 9 tax years).

Note that for salary income between 691,000 yen and under 2.2 million yen, a revised calculation table applies for the Reiwa 8 and 9 tax years, so please confirm that your payroll system has been updated to the latest table.

4-2. Income Tax Rate Table

A 7-bracket progressive tax rate system applies according to taxable income amount.

Taxable income amount | Tax rate | Deduction amount 1,000 yen – 1,949,000 yen | 5% | 0 yen 1,950,000 yen – 3,299,000 yen | 10% | 97,500 yen 3,300,000 yen – 6,949,000 yen | 20% | 427,500 yen 6,950,000 yen – 8,999,000 yen | 23% | 636,000 yen 9,000,000 yen – 17,999,000 yen | 33% | 1,536,000 yen 18,000,000 yen – 39,999,000 yen | 40% | 2,796,000 yen 40,000,000 yen and above | 45% | 4,796,000 yen

Because this is a progressive system, it does not happen that "your take-home pay decreases because your income increased and your tax bracket changed." The higher rate only applies to the portion of income that exceeds each threshold.

4-3. Special Reconstruction Income Tax and Special Defense Income Tax

Currently, a 2.1% Special Reconstruction Income Tax is added on top of the income tax amount.

Under the Reiwa 8 tax reform, starting in January of Reiwa 9 (2027), a new Special Defense Income Tax of 1% will be added to the income tax amount. At the same time, to prevent a sudden increase in household burden, the Special Reconstruction Income Tax rate will be reduced from 2.1% to 1.1%, and to compensate, the collection period will be extended by 10 years to secure reconstruction funding.

5. Income Deductions — Latest Figures for 2026 (Reiwa 8)

In response to rising prices, deduction amounts were significantly increased for two consecutive years, in 2025 (Reiwa 7) and 2026 (Reiwa 8).

5-1. Basic Deduction

This deduction applies to all taxpayers. For the Reiwa 8 and Reiwa 9 tax years, it has a two-tier structure in which a special additional amount is added on top of the base amount.

Total income amount | Basic deduction amount (Reiwa 8 tax year) 4.89 million yen or less | 1.04 million yen (base 620,000 yen + special addition 420,000 yen) Over 4.89 million yen – 6.55 million yen | 670,000 yen (base 620,000 yen + special addition 50,000 yen) Over 6.55 million yen – 23.5 million yen | 620,000 yen (base amount only) Over 23.5 million yen | Reduced in stages

The base amount was raised from 580,000 yen to 620,000 yen to reflect the 6.0% rise in the consumer price index over the two years from November 2023 to October 2025 (Reiwa 5 to Reiwa 7). Going forward, a mechanism has been introduced to review this every two years in line with price changes.

Note that the special addition is a temporary measure for the Reiwa 8 and 9 tax years only; from the Reiwa 10 tax year onward, it is scheduled to change to apply to those with total income of 1.32 million yen or less, with an addition amount of 370,000 yen.

Practical note: The special addition portion (420,000 yen / 50,000 yen) is not reflected in the monthly withholding tax through November of Reiwa 8. It is reconciled in the year-end tax adjustment in December Reiwa 8. There is no need to worry if you see it not yet deducted on your monthly pay slip.

5-2. The Tax-Free Threshold Rises to an Annual Income of 1.78 Million Yen

Adding the basic deduction (1.04 million yen) and the employment income deduction (740,000 yen), income tax does not apply to salary income up to 1.78 million yen. The so-called "annual income wall" has been raised in stages: from 1.03 million yen → 1.6 million yen (Reiwa 7) → 1.78 million yen (Reiwa 8).

5-3. Dependent-Related Deductions

Item | Reiwa 8 tax year requirements/amount Income requirement for dependent relatives/spouse eligible for deduction | Total income of 620,000 yen or less (1.36 million yen or less if salary income only) Special deduction for specific relatives | Applies to relatives aged 19 to under 23. Ranges from 30,000 yen to a maximum of 630,000 yen depending on income Single parent deduction | Income tax: 350,000 yen (380,000 yen from Reiwa 9 tax year) / Resident tax: 330,000 yen Working student deduction | Requires the student's own total income to be 890,000 yen or less

The special deduction for specific relatives is a system newly established in Reiwa 7. It ensures that when a child of college age earns part-time income, the dependent deduction does not disappear abruptly but decreases gradually. Being a student is not a requirement, but spouses and those working full-time in a family business are excluded. To apply, a "Declaration of Special Deduction for Specific Relatives for Employment Income Earners" must be submitted.

5-4. Other Major Income Deductions Social insurance premium deduction: The full amount paid (health insurance, pension, long-term care insurance, etc.) Life insurance premium deduction / Earthquake insurance premium deduction: Amount depending on contract details Medical expense deduction: The portion exceeding 100,000 yen per year (or 5% of income, whichever is lower) Donation deduction: Includes furusato nozei (hometown tax donation) Spousal deduction / Special spousal deduction Disability deduction / Widow(er) deduction Small business mutual aid premium deduction: Includes iDeCo (individual-type defined contribution pension) contributions

6. Resident Tax

Resident tax is levied by the municipality where you have your address as of January 1 of that year, based on your income from January 1 to December 31 of the previous year.

6-1. Composition

Category | Content Income-based portion | Approximately 10% of taxable income (municipal 6% + prefectural 4%) Per capita portion | Flat rate of approximately 5,000 yen (Resident tax per capita portion 4,000 yen + Forest environment tax 1,000 yen)

Some municipalities may add a small surcharge, but the basic structure is the same nationwide.

6-2. Payment Methods Special collection: For company employees, deducted from salary in 12 installments from June each year through May of the following year Ordinary collection: Self-employed individuals, etc., pay in 4 installments (June, August, October, and January of the following year) using a payment notice sent in June

6-3. Points Foreign Residents Should Note

Since resident tax is not charged in your first year in Japan, your take-home pay decreases by several thousand to tens of thousands of yen from the second year. This is often mistakenly interpreted as a decrease in salary.

Even more important is the time of returning to your home country or leaving Japan. If you have an address in Japan as of January 1, the full amount of resident tax for that fiscal year is levied based on the previous year's income. Your tax obligation does not disappear even if you leave Japan partway through the year. You must either pay the full amount before leaving or appoint a tax administrator, as described below.

7. Year-End Tax Adjustment and Final Tax Return

7-1. People Who Complete Their Taxes Through Year-End Adjustment

For most salaried employees, tax payment is completed through the year-end tax adjustment (nenmatsu chosei) performed by their employer in December. This is a procedure to reconcile any difference between the estimated tax withheld by the company and the correct annual tax amount.

7-2. People Who Need to File a Final Tax Return

You must file your own tax return if any of the following apply to you: Your salary income exceeds 20 million yen Your income other than salary exceeds 200,000 yen per year (side business, cryptocurrency, rental income from property abroad, etc.) You receive salary from two or more places You are a sole proprietor or freelancer You resigned partway through the year and did not receive a year-end tax adjustment You wish to claim the medical expense deduction, donation deduction, or home mortgage deduction (first year) You are a non-permanent resident with taxable foreign-source income

7-3. Schedule

Time | Procedure November–December | Submit year-end tax adjustment documents to your employer End of January | Receive your withholding tax statement (gensen choshuhyo) February 16 – March 15 | File final tax return and pay income tax June | Resident tax notice issued and payment begins

A refund claim (a filing to get back overpaid tax) can be submitted anytime within 5 years from January 1 of the following year. There is no need to stick strictly to the March 15 deadline for this purpose.

You can file at a tax office window, by mail, or using e-Tax (which can be completed entirely with a My Number Card and a smartphone). The National Tax Agency's Final Tax Return Preparation Corner sometimes offers guidance in multiple languages, including English and Chinese.

8. Issues Specific to Foreign Residents

8-1. Claiming the Dependent Deduction for Family Members Living Abroad

To claim the dependent deduction for relatives living abroad, you must submit documents proving the family relationship and documents proving remittances.

Furthermore, starting from the 2023 (Reiwa 5) tax year, relatives living abroad who are 30 years old or older and under 70 are, in principle, no longer eligible for the dependent deduction. The only exceptions recognized are the following three: Those living abroad due to studying abroad Persons with disabilities Those who received remittances of 380,000 yen or more for living and education expenses that year

If you have your parents in your home country registered as dependents, please be sure to check their age and the remittance amount.

8-2. Tax Treaties

Japan has concluded tax treaties with many countries, providing for the elimination of double taxation and reductions or exemptions for certain types of income. Some treaties include tax exemption provisions for professors, researchers, students, and business trainees.

To receive treaty benefits, in principle you must submit an "Application Form for Income Tax Convention" to the tax office, usually through the payer. Since this is not applied automatically, there are many cases where people miss out on exemptions they were entitled to simply because they failed to submit this form.

8-3. Foreign Tax Credit

For residents subject to worldwide income taxation, if the same income is also taxed abroad, a certain amount can be deducted from Japanese income tax. This is applied through the final tax return.

8-4. When Leaving Japan — Tax Administrator

If you leave Japan partway through the year, the obligation to file and pay taxes on that year's income remains. There are two ways to handle this: Complete your final tax return before leaving Japan (a "quasi" final tax return) Appoint a tax administrator — Submit a "Notification of Tax Administrator for Income Tax and Consumption Tax" to your local tax office before leaving. This can be a friend, your employer, or a tax accountant, as long as they are an individual or corporation residing in Japan

For resident tax, a separate notification of tax administrator must be submitted to your municipality. Please note this is a separate procedure from the one for income tax.

8-5. Statement of Overseas Assets

Residents (excluding non-permanent residents) who hold overseas assets with a total value exceeding 50 million yen as of December 31 of that year are required to submit a "Statement of Overseas Assets" by June 30 of the following year.

8-6. Exit Tax (Taxation upon Departure from Japan)

This is a system under which certain residents holding 100 million yen or more in securities are taxed on unrealized gains when they leave Japan. It applies to those who have lived in Japan for more than 5 years within the past 10 years, so it does not apply to most ordinary foreign residents, but those with large investment assets should check in advance.

8-7. Pension Lump-Sum Withdrawal Payment and Withholding Tax

The lump-sum withdrawal payment that foreign nationals leaving Japan can claim from the pension system is subject to 20.42% income tax withheld at source. If you appoint a tax administrator before leaving Japan, you may be able to receive a refund of this withheld tax. The order of procedures matters greatly — in some cases, it is too late to fix this if you only realize it after leaving.

9. Frequently Asked Questions

Q. I remit living expenses from my home country to my Japanese bank account. Will this be taxed? A. The remittance itself is not taxed. However, if you are a non-permanent resident and you have foreign-source income that year, that income becomes taxable up to the amount remitted. If you have no foreign-source income, the remittance is simply a transfer of assets and no tax arises.

Q. I earn 150,000 yen a year from a side business. Do I need to file a tax return? A. If your income other than salary is 200,000 yen or less, you do not need to file a final income tax return. However, you still need to file a resident tax return. Since the thresholds for these two are different, failing to file with your municipality is a common oversight.

Q. How is cryptocurrency profit treated? A. Under the current system, it is generally treated as miscellaneous income, subject to the progressive tax rates under comprehensive taxation. Note that the Reiwa 8 tax reform outline indicates a direction toward moving certain cryptocurrency transactions to separate taxation at 20.315%, so please watch for future system changes.

Q. I received a tax payment notice after returning to my home country. What happens if I ignore it? A. Late payment penalties will accrue, and it could ultimately lead to seizure of assets. Also, unpaid taxes can negatively affect the review of residence status renewal or change applications, so this deserves particular attention if you plan to return to Japan in the future.

Q. If my company does my year-end tax adjustment, is there nothing else I need to do? A. In most cases, that is correct. However, things like the medical expense deduction, furusato nozei donations (if not using the One-Stop Special System), and dependent deductions for relatives living abroad either cannot be processed through year-end adjustment or require additional documents.

10. Reference Information National Tax Agency (income tax and final tax returns in general) — e-Tax, Final Tax Return Preparation Corner Your municipal government office, Tax Division (resident tax, tax administrator notifications) Tax office consultation counters — Telephone consultation centers and in-person consultations (reservations may be required) Japan Federation of Certified Public Tax Accountants' Associations — Search for a tax accountant

When renewing your residence status or applying for permanent residency, you are generally required to submit a tax payment certificate. Properly completing your tax payments on a daily basis not only helps you avoid tax-related problems but is also directly tied to protecting your foundation for living in Japan.

Last updated: August 25, 2026 / The amounts and systems described are subject to change due to future legal revisions.