Japanese Payslip Decoded: Every Deduction Explained | MyKyoten

Open your kyuyo meisai and you will see two columns. The left side lists your earnings: base salary, overtime, commuting allowance, housing allowance if applicable. The right side lists your deductions. The bottom line is what hits your bank account.

On a ¥350,000 base salary with a ¥15,000 commuting allowance, total earnings are ¥365,000. After deductions in your first year, take-home is approximately ¥280,875. In your second year, once resident tax is added, it drops to around ¥255,875. That is a 70% take-home rate - roughly what most salaried employees in Japan should expect long-term.

The deductions are not negotiable, not optional, and not administrative errors. They are legal obligations split between you and your employer. Understanding each one removes the anxiety of seeing your salary disappear before you can spend it.

The first deduction most people notice is shotoku zei, income tax. Your employer withholds this from every paycheck based on national tax tables that estimate what you will owe for the year. The key word is estimate. Monthly withholding is an approximation, not your final tax liability.

Japan uses a progressive income tax system. Rates range from 5% on the first ¥1.95 million of taxable income up to 45% on income above ¥40 million. On top of that, there is a 2.1% reconstruction surtax applied to your national income tax amount, originally introduced after the 2011 earthquake and extended through 2037.

Most full-time employees earning ¥3-7 million annually will see an effective national income tax rate of around 5-10% of gross salary. The exact amount depends on your deductions and declared dependents.

Your employer calculates monthly withholding using tables published by the National Tax Agency. If you earn overtime one month, withholding goes up. The real reckoning comes in December during nenmatsu chosei, the year-end adjustment.

If income tax is the deduction you expect, resident tax is the one that blindsides you. Jumin zei does not appear on your payslip during your first year in Japan. Then in June of your second year, a new line item shows up and your take-home pay drops by another ¥20,000-40,000 per month.

Here is how it works. Resident tax is calculated on your previous calendar year's income and billed from June of the current year through May of the following year. So your 2025 income determines your resident tax from June 2026 to May 2027. The rate is a flat 10% of your taxable income from the previous year, plus a per capita levy of around ¥4,000-5,000 per year. Because you had no Japanese income in the calendar year before you arrived, there is nothing to bill in your first year.

Your employer deducts resident tax through special collection (tokubetsu choshu), splitting the annual amount into 12 monthly payments starting in June. The June payment is sometimes slightly larger because the city rounds the annual amount and puts the remainder into the first instalment.

For a deeper breakdown of this timing and how to budget for it, see our guide on the resident tax second year shock.

The social insurance section of your payslip contains three deductions. Together they account for roughly 14.65% of your salary.

Kousei nenkin (employees' pension) is the largest. The total contribution rate is 18.3% of your standard monthly remuneration, fixed since 2017. You and your employer split it evenly, so your share is 9.15%. On a ¥350,000 monthly salary that is roughly ¥32,000 per month. There is an upper cap: at standard monthly remuneration of ¥650,000 or above, your share is capped at ¥59,475.

Kenko hoken (health insurance) covers 70% of your medical costs at any hospital or clinic in Japan. The rate varies by prefecture and insurance association. In Tokyo under Kyokai Kenpo, the FY2025 employee rate is approximately 4.95% of standard monthly remuneration. On a ¥350,000 salary that is around ¥17,200 per month. If you are 40 or older, add roughly 1.6% for kaigo hoken, long-term care insurance.

Koyo hoken (employment insurance) is the smallest deduction at 0.55% of total wages - around ¥1,925 on a ¥350,000 salary. If you lose your job, this funds your unemployment benefits through Hello Work. For the visa implications of job loss, see the work visa job loss guide.

All social insurance premiums are fully deductible from your taxable income, which reduces your income tax and resident tax slightly. The effective cost is a little lower than the raw numbers suggest.

Your deductions are not static. Several shifts happen at predictable points and knowing when they occur helps you plan.

June is when new resident tax amounts kick in. If you earned more last year, your June deduction will be higher. This is the single largest mid-year surprise most employees face.

September is when social insurance premiums are typically revised. Your employer reports your average monthly earnings from April through June, and the resulting standard monthly remuneration determines your pension and health insurance premiums for the next twelve months. A spring bonus or high overtime during those three months can bump your premiums.

December brings nenmatsu chosei, the year-end tax adjustment. Your employer reconciles your actual income tax liability against what was withheld. For most employees this results in a small refund appearing in the December or January paycheck.

January is when new withholding tax tables take effect if the government has adjusted brackets. Rarely dramatic, but worth noting if your January payslip looks slightly different from December.

The income tax withheld each month is not your final tax. It is an estimate. Your actual liability is calculated at year end during nenmatsu chosei. If too much was withheld, you get a refund in December or January. The December payslip often looks generous - this is why.

Resident tax does not disappear when you leave Japan mid-year. If you leave, the full annual amount assessed on your previous year's income is still owed. Leaving Japan does not cancel the bill. This is why appointing a tax representative before departure matters. See the pension and social insurance guide for departure planning.

Two people with the same gross salary will not necessarily have the same deductions. Differences in dependents, health insurance association, prefecture for resident tax, age (kaigo hoken kicks in at 40), and how housing benefits are structured all create variation. If your colleague takes home more on the same salary, the answer is almost certainly in these factors.

Commuting allowance is tax-free up to ¥150,000 per month for public transit - but it is included in your standard monthly remuneration for social insurance purposes. Your pension and health insurance premiums can be slightly higher because of it, even though you pay no income tax on it.

Read your payslip every month, not just the bottom number. Confirm each deduction line roughly matches expectations. If something looks significantly off, ask HR. Keep your December payslip - it is the closest thing to an annual tax summary you will receive unless you file your own return.

If you receive a payslip and the Japanese deduction labels are unclear, use the Payslip Decoder to get an English breakdown of every line item with an explanation of what each deduction is and whether the amount looks normal for your income level.

Japanese payslip breakdown showing base salary, deductions for income tax, resident tax, pension, health insurance, and employment insurance, with net pay

A ¥350,000 salary after all deductions: year one vs year two

Japan income tax rate chart for 2026 showing progressive brackets from 5% to 45% with reconstruction surtax

Japan income tax brackets 2026: most employees fall in the ¥3-7M typical range

Jumin Zei: The Tax That Appears in Your Second Year

Timeline showing resident tax starting in June of year two, calculated on year one income, with example of ¥35,000 per month

Why resident tax hits in your second year - and how to prepare for it

Kousei Nenkin and Kenko Hoken: Your Social Insurance

Chart showing employee share of social insurance contributions: pension 9.15%, health insurance 4.95%, employment insurance 0.55%, total approximately 14.65%

Your social insurance contributions as an employee - roughly 14.65% of salary total

When Your Deductions Change During the Year

Annual calendar showing when payslip deductions change: June resident tax adjustment, September social insurance revision, December year-end adjustment

When your deductions change: the payslip calendar every employee should know