When you work in Japan, Income Tax and Resident Tax are automatically deducted from your salary. These two taxes work differently, and you should be careful about Resident Tax, which is paid the following year. Many foreigners are surprised by a large bill after they leave Japan. This article explains the basics.
What is Income Tax (Shotoku-zei)?
- Paid to the national government
- Based on this year’s income
- Withheld from your salary each month (Gensen Choshu)
- Settled at year-end via Year-End Adjustment. Overpayments are refunded
What is Resident Tax (Juminzei)?
- Paid to the city or ward where you live
- Based on the previous year’s income (important)
- Paid in 12 monthly installments from June of the next year to May of the year after
- For employees, withheld from salary (Special Collection). For self-employed, paid by bank transfer (Ordinary Collection)
Example: Resident Tax on income from 2025 is paid from June 2026 to May 2027.
So even if you leave Japan in December 2025, you may still receive bills for Resident Tax from June 2026 onward.
Tax Amount Guide (by Annual Income)
| Annual Income | Income Tax (yearly) | Resident Tax (yearly) |
|---|---|---|
| 2 million yen | About 30,000 yen | About 80,000 yen |
| 3 million yen | About 50,000 yen | About 130,000 yen |
| 4 million yen | About 80,000 yen | About 180,000 yen |
| 5 million yen | About 150,000 yen | About 240,000 yen |
Amounts vary based on deductions (dependents, social insurance, etc.)
Tax Issues When Leaving Japan
Unpaid Resident Tax Always Exists
If you leave in December, the January to May installments will still be billed after departure.
Solution: Appoint a Tax Administrator
Before leaving, submit a Notification of Tax Administrator at the city hall, naming a friend, colleague, or administrative scrivener in Japan. They can pay taxes and receive refunds on your behalf.
Or Pay Lump-Sum in Advance
You can also confirm the expected unpaid amount at the city hall before departure and pay it in a lump sum.
Year-End Adjustment vs Final Tax Return
Year-End Adjustment (for Employees)
- Your company handles the income tax settlement
- Submit documents such as life insurance certificates to your company in November or December
- Overpayments are refunded in December or January salary
Kakutei Shinkoku (Final Tax Return)
You must file a final tax return yourself if:
- Side income is 200,000 yen or more per year
- Medical expenses exceed 100,000 yen (medical deduction)
- You used Furusato Nozei (Hometown Tax)
- You received salary from multiple employers
- Your annual income exceeds 20 million yen
Period: February 16 to March 15 each year. File at the tax office or via e-Tax.
Reducing Tax with Deductions
- Basic deduction: 480,000 yen (everyone)
- Spouse deduction: if your spouse earns little
- Dependent deduction: for children or parents you support (overseas family may qualify in some cases)
- Social insurance deduction: health insurance and pension premiums fully deductible
- Life insurance deduction: for life insurance holders
- Medical expense deduction: for over 100,000 yen in medical expenses
Claiming Overseas Family as Dependents
Claiming family members living abroad as dependents can significantly reduce Income Tax and Resident Tax.
Required Documents
- Family relationship documents (family register, marriage certificate, plus translation)
- Remittance records (Wise history, bank transfer records)
If you send over 380,000 yen per year, the dependent deduction can save tens of thousands to over 100,000 yen in taxes.
Summary
- Income Tax goes to the state. Resident Tax goes to the city
- Resident Tax is paid the next year, based on last year’s income (after-pay system)
- When leaving Japan, appoint a Tax Administrator or prepay
- Employees use Year-End Adjustment. Side income means Final Tax Return
- Claiming overseas family as dependents can save a lot of tax
Tax system as of April 2026. For details, check the National Tax Agency or your city hall.
Comments