Employer Tax Contributions

Tax Type	Rate (Employer Share)	Base
Health Insurance	4.72%–5.39% (varies by prefecture and age of employee)	Standard monthly remuneration
Employees' Pension	9.15% (half of 18.3%)	Standard monthly remuneration
Unemployment Insurance	0.9% (General business)	Employee's total wage
Workers' Accident Comp.	Varies by industry type (e.g., 0.25% to 8.8%) + 0.002%	Employee's total wage

Filing & Compliance

• Monthly Withholding Tax Remittance: Due by the 10th day of the following month. For businesses with fewer than 10 employees, semi-annual payment is possible (July 10th for Jan-June; Jan 20th for July-Dec).
• Monthly Social Insurance Premium Remittance: Due by the last day of the following month.
• Year-End Adjustment & Withholding Slips: Employers perform year-end tax adjustments for employees in December. Withholding slips must be issued to employees and submitted to the tax/municipal office by January 31st of the following year.

In 2025, Japan's income tax system introduces several key changes affecting deductions, impacting resident taxpayers.

Deductions

• Basic Deduction: Increased to a maximum of JPY 580,000, up from JPY 480,000. The amount of the basic deduction starts decreasing when your taxable income is over 23.5 million yen, decreasing eventually down to 0. It decreases down to 480,000 yen if your total taxable income is between 23.5 million and 24 million yen. It decreases down to 320,000 yen if your total taxable income is between 24 million and 24.5 million yen. It decreases down to 160,000 yen if your total taxable income is between 24.5 million and 25 million yen. If your total taxable income is over 25 million yen then the amount of deduction is zero.

• Employment Income Deduction: The minimum deduction rises from JPY 550,000 to JPY 650,000. The deduction is calculated based on income brackets and is capped at JPY 1.95 million. The calculation is as follows:

  • Up to JPY 1,625,000: JPY 650,000
  • JPY 1,625,001 - JPY 1,800,000: 40% of employment income - JPY 100,000 (minimum JPY 650,000)
  • JPY 1,800,001 - JPY 1,900,000: 30% of employment income + JPY 80,000
  • JPY 1,900,001 - JPY 3,600,000: 30% of employment income + JPY 80,000
  • JPY 3,600,001 - JPY 6,600,000: 20% of employment income + JPY 440,000
  • JPY 6,600,001 - JPY 8,500,000: 10% of employment income + JPY 1,100,000
  • Over JPY 8,500,000: JPY 1,950,000

• Deduction for Dependents: A new deduction of JPY 630,000 is introduced for dependents aged 19-22 with income up to JPY 1.5 million. This deduction decreases gradually if the dependent's income surpasses JPY 1.5 million.

• Social Security Contributions: Fully deductible.

• Medical Expenses: Deductible with limitations. Expenses are deductible irrespective of where they were paid.

• Charitable Contributions: Deductible for designated charities, primarily in Japan, with limitations. The deduction is generally limited to 40% of income, less JPY 2,000, for contributions exceeding JPY 2,000.

• Life Insurance Premiums: Deductible up to a certain limit for premiums paid to Japanese agencies in local currency. Earthquake insurance premiums are also deductible up to a limit.

• Mortgage and Home Renovation: Deductions related to these are extended through 2025 for those with dependent children.

Tax Return Deadlines and Requirements

• The deadline for the final income tax payment is March 15th of the following year.
• Those with income exceeding JPY 20 million, multiple jobs, non-resident status, side income exceeding JPY 200,000, capital gains on shares, or foreign stock-based compensation must file a tax return regardless of withholding. Local taxes are calculated annually by local tax offices.

Other

• The individual income tax rates remain the same in 2025, however, tax credits and deductions can be availed by certain resident tax payers fulfilling the necessary requirements and criteria, some of which are described above, and some will be described here: tax credit for housing loans, tax credit for home renovation, and deduction for life insurance premiums. These tax rates are divided into several brackets, ranging from 5% for income up to 1,950,000 yen, 10% for incomes between 1,950,001 and 3,300,000 yen, 20% for incomes between 3,300,001 and 6,950,000 yen, and going up to 45% for incomes over 40 million yen.
• In the realm of retirement income, it's noteworthy to highlight that overlapping periods of service are now excluded from the retirement income deduction calculation for payments made on or after January 1, 2026.

This information is current as of February 5, 2025, and might be subject to change. Always consult with a tax professional for personalized advice.