When you work for a company in Japan, taxes and insurance premiums are taken out of your salary every month. Looking at your payslip, you may wonder why so much is deducted, or why your take-home pay suddenly dropped in your second year.
In this guide, we explain what gets deducted from a company employee’s salary, how to read your payslip, why there’s no resident tax in your first year, and the year-end adjustment (nenmatsu chosei) your company does at the end of the year, based on official information from the National Tax Agency, the Ministry of Internal Affairs and Communications, and others.
The overall Japanese tax system and filing your own tax return are covered in separate articles. Here we focus on a company employee’s “monthly deductions” and “year-end adjustment.”
This article provides general information based on official sources as of October 2026. The amounts deducted depend on your salary, where you live, your age, your family situation, and more. For your own amounts, check with the person in charge at your company or your city office.
1. How to Read a Payslip
A payslip is usually divided into three parts:
| Part | What it shows |
|---|---|
| Payments (shikyu) | Money the company pays, such as base salary, overtime pay, and commuting allowance |
| Deductions (kojo) | Money taken out of your salary, such as taxes and insurance premiums |
| Net pay (sashihiki shikyugaku) | Payments minus deductions; the amount actually paid into your account (take-home pay) |
Common items in the deductions section:
| Payslip term | What it is |
|---|---|
| Shotokuzei (gensen shotokuzei) | Income tax paid to the national government. Your company takes it from your monthly salary and pays it on your behalf |
| Juminzei | Resident tax paid to your city and prefecture |
| Kenko hoken | Health insurance premiums for medical costs and similar |
| Kaigo hoken | Long-term care insurance premiums paid with health insurance by people aged 40 to 64 |
| Kosei nenkin | Employees’ Pension premiums for the pension you receive later in life and similar |
| Koyo hoken | Employment insurance premiums for benefits if you lose your job and similar |
| Kodomo kosodate shienkin | The child and child-rearing support contribution that started from April 2026 |
Item names and order may differ by company. If you don’t understand an item, ask the person in charge at your company.
2. What’s Deducted and How It’s Decided
| Deduction | How the amount is decided | From when? |
|---|---|---|
| Income tax | Your monthly salary after social insurance premiums, whether you submitted the dependent deduction declaration, and how many dependents you have | From your first salary |
| Resident tax | Your income in the previous year | If you had no income in Japan the year before, from around June of the year after you start working |
| Health insurance, long-term care insurance, child-rearing support contribution | Your salary level (standard monthly remuneration) and the premium rate | After you join (when it’s taken from your salary depends on the company) |
| Employees’ Pension | Your salary level (standard monthly remuneration) and the premium rate | From the month you join (when it’s taken from your salary depends on the company) |
| Employment insurance | Your salary and the premium rate | After you join (when it’s taken from your salary depends on the company) |
The two taxes are income tax and resident tax. The rest are social insurance and similar premiums.
(Reference: NTA No.2511 / Japan Pension Service "Employees’ Pension premiums when joining or leaving mid-month" / Japan Pension Service "Paying Employees’ Pension premiums" (Japanese))
3. Income Tax (Withholding)
Your company takes income tax from your monthly salary and pays it to the government on your behalf. This is called withholding (gensen choshu).
The amount withheld each month is set by the National Tax Agency’s “withholding tax table.” Which column is used depends on whether you’ve submitted the “dependent deduction declaration for salary earners” (kyuyo shotokusha no fuyo kojo-to shinkokusho) to your company.
| Dependent deduction declaration | Column used |
|---|---|
| Submitted | Column A (kou-ran) |
| Not submitted | Column B (otsu-ran) |
You submit the declaration to your company by the day before your first salary of each year (if you join during the year, by the day before your first salary after joining). If you get a salary from two or more companies, the salary from the company you submitted the declaration to is your “main salary” (Column A), and the salary from the other companies is “secondary salary” (Column B). When Column B is used, more income tax is withheld each month. For documents you need when joining a company, see Full-Time Job Documents in Japan: New Graduates, Job Changers, Overseas Hires and Part-Time Job Documents in Japan: What to Prepare.
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Your company is required to give you a “withholding slip for employment income” (gensen choshuhyo) by January 31 of the following year (within one month after you leave, if you leave during the year). It’s an important document showing the total salary paid and income tax withheld that year.
(Reference: NTA No.2511 / NTA No.2520 / NTA No.7411 / NTA "Dependent deduction declaration" / NTA "Withholding tax tables (2026)" (Japanese))
4. Resident Tax
Resident tax is paid to your city by people who have an address in Japan on January 1 and receive at least a set amount of salary or other income. This also applies to people who aren’t Japanese nationals.
Why there’s no resident tax in your first year
Resident tax is based on the salary and other income you received from January 1 to December 31 of the previous year. So in the year you start working in Japan, you often have no resident tax deducted, because you had no salary in Japan the year before. From around June of the following year, resident tax starts being taken from your salary, and your take-home pay seems to drop. However, if you had a certain amount of income in Japan the year before (for example, from a part-time job while you were a student), resident tax may be deducted from your salary in your first year at the company. The income level below which you don’t pay resident tax changed from fiscal 2026. For details, see Japan’s ‘103-Man Resident Tax Wall’ Becomes 123-Man in June 2026: How Part-Time Spouses and Student Workers Take Home More.
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Deduction from your salary (special collection)
For company employees, the company takes resident tax from your salary and pays it to your city on your behalf. This is called special collection (tokubetsu choshu). For example, Hiroshima City explains that special collection divides the annual tax into 12 payments from June to May of the following year, taken from your salary. The Ministry of Internal Affairs and Communications says this is the basic method for company employees, so you don’t need to pay your city yourself.
The method of paying yourself is called ordinary collection (futsu choshu). Around June each year, your city sends you a payment slip, and you pay at a financial institution or similar.
If you don’t pay resident tax
The Ministry of Internal Affairs and Communications says that if you don’t pay the resident tax you owe, your application to renew your period of stay or similar may not be approved. Be careful not to forget to pay after you leave a company or if you pay yourself.
(Reference: MIC "Individual resident tax for international residents" / MIC "Individual Resident Tax" / Hiroshima City "Special collection from salary" (Japanese))
5. Social Insurance Premiums
Most company employees join the company’s health insurance, Employees’ Pension, and employment insurance. Premiums are taken from your salary.
Employees’ Pension
Employees’ Pension premiums are calculated by multiplying your monthly salary (standard monthly remuneration) and bonuses by the premium rate. The rate is 18.3%, split equally between the company and you. Your share is 9.15% of your standard monthly remuneration and standard bonus amount.
Health insurance, long-term care insurance, child-rearing support contribution
Kyokai Kenpo’s health insurance premium rate differs by prefecture. You can check the premium for each salary level in Kyokai Kenpo’s “premium tables.”
People aged 40 to 64 also pay long-term care insurance premiums with their health insurance. Kyokai Kenpo’s long-term care insurance rate is 1.62% from the March 2026 premium (split equally between the company and you).
From the April 2026 premium, the child and child-rearing support contribution system started. Kyokai Kenpo’s contribution rate is 0.23% (split equally between the company and you). For how the contribution works, see Child-Care Support Fund: Understanding the Costs and Its Impact on PR for International Residents (2026 Latest).
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Employment insurance
Employment insurance premiums are calculated by multiplying your salary by the premium rate. For general businesses in fiscal 2026 (April 2026 to March 2027), the worker’s share is 5 per 1,000 (0.5%).
Your pension when you leave Japan (lump-sum withdrawal payment)
If you don’t have Japanese nationality and you leave Japan after losing your Employees’ Pension or National Pension coverage, you can claim a “lump-sum withdrawal payment” within 2 years of the day you no longer have an address in Japan. There are conditions, so check the Japan Pension Service page.
(Reference: Japan Pension Service "Employees’ Pension premiums" / Kyokai Kenpo "FY2026 premium tables" / Kyokai Kenpo "Long-term care insurance rate" / Kyokai Kenpo "Child-rearing support contribution rate" / MHLW "FY2026 employment insurance rates" (PDF) / Japan Pension Service "Lump-sum withdrawal payment" (Japanese))
6. Year-End Adjustment
Year-end adjustment is the procedure where your company recalculates, at the end of the year, the difference between the income tax it withheld over the year and the tax you actually owe. If too much was withheld, you get it back; if too little, more is deducted.
Who it applies to
According to the National Tax Agency, the December year-end adjustment covers people who work at the company throughout the year and people who joined during the year and work until the end of the year. However, people whose annual salary is over 20 million yen, among others, aren’t covered. Also, to get year-end adjustment, you need to have submitted the dependent deduction declaration. Secondary salary (Column B salary) is basically not covered by year-end adjustment. If your secondary salary and other income add up to more than 200,000 yen a year, among other cases, you need to file a tax return.
People who become non-residents (people who no longer live in Japan, for example) during the year, for example by transferring to an overseas branch, have their year-end adjustment done at that time.
Documents you give your company
Around the year-end adjustment period (toward the end of the year), your company asks you to submit documents. The main ones are the dependent deduction declaration and the declaration for deductions such as life insurance premiums. If you claim the life insurance premium deduction, also submit a document proving the amount you paid.
Including family living abroad as dependents
If you include family members living in your home country as dependents to get the dependent deduction, you need to submit or show your company “relationship documents” proving they’re your relatives and “remittance documents” proving you sent money for living expenses and similar. For family members aged 30 to 69 who are studying abroad, you also need “study abroad visa documents.” If you include them because you send them 380,000 yen or more, you need “380,000-yen remittance documents” instead of regular remittance documents. The timing for submitting each document differs, so check with the person in charge at your company. From 2023, family members living abroad aged 30 to 69 don’t qualify for the dependent deduction, except in cases such as having left Japan to study abroad, having a disability, or receiving 380,000 yen or more from you.
After year-end adjustment
Year-end adjustment basically settles your income tax. However, people whose side income and similar is over 200,000 yen a year, among others, need to file a tax return themselves. Also, to get the medical expense deduction, or the furusato nozei deduction without using the One-Stop Exception, you file a tax return. For how furusato nozei works, see Furusato Nozei in Japan: How It Works and How to Apply.
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(Reference: NTA No.2662 / NTA No.2665 / NTA "Q&A on deductions for relatives living abroad" (PDF) / NTA No.1900 / NTA No.1180 / NTA No.2520 / NTA No.1120 / MIC "Furusato nozei tax deductions" / NTA "Insurance premium deduction declaration" (Japanese))
7. How Is Take-Home Pay Calculated?
Take-home pay (net pay) is calculated in this order:
- Add up your payments (base salary + overtime + allowances and so on)
- Subtract social insurance premiums (health insurance, long-term care insurance, child-rearing support contribution, Employees’ Pension, employment insurance)
- Calculate income tax from the withholding tax table, based on the amount after social insurance and similar, and subtract it
- Subtract resident tax (the amount set from your previous year’s income)
- What’s left is your take-home pay
Health insurance premiums differ by prefecture, and resident tax depends on your previous year’s income, so take-home pay differs from person to person even with the same salary. You can check your own amounts on your payslip, in Kyokai Kenpo’s premium tables, and in the resident tax notice from your city.
(Reference: NTA No.2511 / Kyokai Kenpo "FY2026 premium tables" (Japanese))
8. When You Leave a Company or Leave Japan
Remaining resident tax
When you leave a company, you basically pay the remaining resident tax yourself (ordinary collection). However, you can also have the company take all the remaining resident tax from your last salary or severance pay (lump-sum collection). The Ministry of Internal Affairs and Communications says that if you leave the company between January and May, the company does lump-sum collection even without your request.
If you leave Japan
If you can’t pay your resident tax before you leave Japan, you need to choose someone living in Japan to handle your tax procedures on your behalf (a tax agent, nozei kanrinin) before you leave and notify your city. Resident tax applies if you had an address in Japan on January 1 of that year, even if you leave Japan on or after January 2.
Your pension
If you were in Employees’ Pension and leave Japan, you can claim the lump-sum withdrawal payment within 2 years of the day you no longer have an address in Japan, if you meet the conditions (see Section 5).
(Reference: MIC "Individual resident tax for international residents" (Japanese))
FAQ
Q: It’s my first year in Japan and no resident tax is being deducted. Is that okay?
A: Resident tax is based on the previous year’s salary and other income. In the year you start working in Japan, you often have no resident tax deducted because you had no salary in Japan the year before. It starts being deducted from around June of the following year. However, if you had a certain amount of income in Japan the year before (for example, from a part-time job while you were a student), resident tax may be deducted from your salary in your first year at the company.
Q: I work for two companies. Which one should I give the dependent deduction declaration to?
A: The salary from the company you submit the declaration to is your “main salary,” and salary from the other company is “secondary salary.” Column B of the withholding tax table is used for secondary salary, so more income tax is withheld. If you get a salary from two places, you may need to file a tax return.
Q: Am I paying all of my Employees’ Pension premiums myself?
A: No. The Employees’ Pension premium rate is 18.3%, split equally between the company and you.
Q: Can I include family in my home country as dependents?
A: You can if you meet the conditions, but you need relationship documents and remittance documents. The documents you need depend on your family member’s age and situation. From 2023, family members living abroad aged 30 to 69 don’t qualify, except in cases such as having left Japan to study abroad, having a disability, or receiving 380,000 yen or more from you.
Q: What happens to my resident tax when I leave my company?
A: You basically pay the remaining resident tax yourself. You can also ask your company to take it all from your last salary or severance pay. If you leave between January and May, the company takes it all at once.
Q: What happens to the pension I paid when I go home?
A: If you don’t have Japanese nationality and leave Japan after losing your pension coverage, you can claim a lump-sum withdrawal payment within 2 years of the day you no longer have an address in Japan. Check the conditions on the Japan Pension Service page.
Key Takeaways
- ✅ A payslip has three parts: payments, deductions, and net pay (take-home pay)
- ✅ Income tax is withheld from your monthly salary. If you don’t submit the dependent deduction declaration, Column B is used and more is withheld
- ✅ Resident tax is based on the previous year’s income. It’s often not deducted in your first year of working in Japan and starts around June of the year after you start working
- ✅ Employees’ Pension is 18.3%, split equally with your company. Health insurance rates differ by prefecture
- ✅ The child-rearing support contribution started from the April 2026 premium. Your employment insurance share is 0.5% in fiscal 2026
- ✅ Year-end adjustment basically settles your income tax. Including family abroad as dependents requires documents
- ✅ Not paying resident tax can affect renewing your period of stay. Watch your remaining resident tax when leaving a company or Japan
Your payslip is an important document for your everyday life. If you don’t understand an item, ask the person in charge at your company or your city office early.
