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Income tax in Japan is based on a marginal tax rate. This means that you are taxed at a higher rate, the higher your income is.

This is the tax rate based on annual income.

Taxable Income (yen)Tax PercentageDeductible Amount (yen)
Under 1.95M5%0
1.95M-3.30M10%97,500
3.3M-6.95M20%427,500
6.95M-9M23%636,000
9M-18M33%1,536,000
18M-40M40%2,796,000
Above 40M45%4,796,000

The deductible amount in the table is the amount of relief you get, or in other words, you won't get taxed on that amount. For example, if your taxable income is 4M yen, you get a 427,500 yen relief.

Therefore, only 3,572,500 yen will be taxed at 20%.

As you can see in the table, this is based on your taxable income, which is different from your annual income, you now have to work out that number.

How to find taxable income in Japan?

To get your taxable income, you can look at your year-end salary slip (給与所得の源泉徴収票), which is the slip that your company's finance will send to you along with your December salary slip.

On it, you will see two values, Income After Deductions (給与所得控除後の金額) and to the right of to it, Total Income Tax Deductions Amount (所得控除の額の合計額)

To get your taxable income to get the income tax percentage, you have to subtract the Total Income Tax Deductions Amount (in blue above) from Income After Deductions (in red above).

For example, if your Income After Deductions is 4,260,000 yen and Total Income Tax Deductions Amount is 1,860,000 yen, then your taxable income is:

4,260,000 – 1,860,000 = 2,400,000 yen which puts you in the 10% tax bracket based on the above table.

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Tagged tax