The Second-Year Salary Shock: Why Your June Paycheck Drops | MyKyoten

Last verified: 2026. This guide is based on Immigration Bureau regulations, Ministry of Health Labour and Welfare guidelines, and standard Japanese administrative practice. It is informational only and does not constitute legal advice. Consult a licensed immigration attorney or official government sources for case-specific guidance.

Your June paycheck arrives. You open it. The number is wrong, or at least it looks wrong. ¥20,000, ¥25,000, sometimes more, just gone. No letter from HR. No heads-up. No explanation beyond a new line item on your payslip labeled 住民税 (*jūminzei*). You are not being taxed incorrectly. You are not being cheated. This is exactly how Japan's resident tax system was built to work, and now you are locked into it for 12 months.

Why Does Your Paycheck Drop in Year Two and Not Year One?

Japan's resident tax operates on a one-year lag. Your income from January to December of your first year is assessed the following year, and deductions begin in June of that assessment year. This is not a quirk or an oversight. It is the structural design of the *jūminzei* system.

Here is what that looks like in practice. You arrive in Japan in 2024. You work and earn income throughout 2024. In early 2025, your employer files your income details with your local municipality. The municipality calculates what you owe, sends a tax determination notice to your employer, and from June 2025, your employer starts deducting that annual bill in 12 equal monthly installments through May 2026.

This is why your first year feels financially lighter than it actually is. You are not paying resident tax yet. The bill is being calculated behind the scenes.

The WHY behind this system: municipalities need finalized annual income figures before they can calculate what you owe. Since the Japanese tax year runs January to December and final filing happens in spring, the earliest the system can produce accurate numbers is May or June. So June becomes the universal start date for payroll deductions across the entire country.

Here is the part nobody tells you: most foreign workers are never warned about this in advance, not by their employer, not by their recruiter, and not at city hall. Reports from foreign residents consistently describe the June drop as completely unexpected, even among those who did thorough research before arriving.

→ Use the Document Decoder to translate and understand your Japanese administrative documents.

How Do You Calculate Exactly How Much Your Paycheck Will Drop?

The standard resident tax rate in Japan is 10% of your prior year taxable income (this breaks down as 6% prefectural and 4% municipal in most areas, though exact splits vary slightly by location). On top of that, there is a flat per-capita levy (*均等割, kintōwari*) that typically adds around ¥5,000 to ¥6,000 per year depending on your municipality.

The calculation runs like this:

1. Take your gross income from the prior year. 2. Subtract the basic deduction (¥480,000 as of 2026 for most earners) and any other applicable deductions (employment income deduction, dependent deductions, etc.). 3. Apply 10% to the resulting taxable income figure. 4. Add the per-capita levy. 5. Divide the total by 12. That is your new monthly deduction starting June.

The employment income deduction alone is substantial and scales with your salary, so your actual taxable base is meaningfully lower than your gross. Do not make the mistake of applying 10% directly to your gross and assuming that is the final number. It will be higher than reality.

[Warning Box] If you skip accounting for deductions and mentally budget 10% of your gross income as your resident tax hit, you will overestimate your bill. But if you forget about the per-capita levy or assume your municipality applies the exact same rates as Tokyo, you may underestimate slightly. Always confirm the final number on your tax determination notice (住民税決定通知書) or ask HR for the exact monthly amount.

A Real Yen Example: What Does This Actually Look Like?

Take a Brazilian software engineer on an Engineer/Specialist in Humanities/International Services visa. She earned ¥4,000,000 gross in her first full calendar year in Japan.

After applying the employment income deduction (roughly ¥1,240,000 at that income level under current rules) and the basic deduction of ¥480,000, her taxable income is approximately ¥2,280,000.

• 10% resident tax on ¥2,280,000 = ¥228,000
• Per-capita levy (approximate) = ¥5,500
• Total annual resident tax bill = approximately ¥233,500
• Divided by 12 = approximately ¥19,460 per month

Starting June of her second year, her paycheck drops by roughly ¥19,500 every single month through May of the following year. No negotiation. No deferral. The deduction is automatic once your employer receives the municipality's notification.

If her income was higher, say ¥5,500,000 gross, the monthly deduction would climb closer to ¥28,000 to ¥30,000 depending on deductions applied.

You can cross-reference the line items on your payslip using the Payslip Decoder, which breaks down Japanese payslip fields including the 住民税 row so you can confirm the deduction matches what your municipality calculated.

What Happens in Year Three and Beyond?

This is the part that actually brings relief. The shock only hits once.

By year three, you have already been paying resident tax since the previous June. When the new annual assessment arrives in June of year three, the old deduction simply adjusts to reflect your year-two income. If your salary stayed roughly the same, the change is minor. If you got a raise, the deduction ticks up modestly. If your income dropped, it goes down. Either way, you are no longer experiencing a zero-to-full jump. You are experiencing an adjustment.

The system stabilizes into a rhythm: earn income this year, pay tax on it starting next June. That is the permanent operating reality.

[Reality Check] Foreigners who leave Japan mid-year face a specific risk here. If you resign in, say, August and your employer has been deducting resident tax since June, those deductions cover an obligation that was calculated assuming 12 monthly payments. When employment ends, the remaining unpaid balance becomes due immediately as a lump sum, collected either by your employer from your final paycheck or billed directly to you by the municipality. This catches a significant number of departing foreign workers off guard.

What if you are leaving Japan this year? Use the Leaving Japan Calculator before you finalize your exit date. It helps you estimate outstanding tax liabilities so you are not hit with an unexpected bill after you leave.

What if you changed jobs mid-year? Your new employer will not automatically receive the resident tax deduction notice. In some cases, the municipality switches to direct billing (*futsū chōshū*) rather than payroll deduction. You may receive a paper bill at home instead of seeing the deduction on your payslip. Missing that paper bill has consequences. Unpaid resident tax accrues late fees and can complicate future visa renewals, since tax payment records are sometimes requested during permanent residency applications.

How Do You Prepare Practically Before June Hits?

Start in March or April of your second year. That is when to act, not June.

[Step-by-Step Checklist] - Step 1: Pull your prior year's gensen chōshū-hyō (源泉徴収票, withholding slip). This shows your total annual taxable income after employment income deductions. If you cannot find it, ask HR. You can also decode it at the Gensen Withholding Slip Decoder. - Step 2: Apply the rough formula: (taxable income from withholding slip) × 10% + ¥5,500, then divide by 12. This gives you a working estimate of your June drop. - Step 3: Adjust your monthly budget by that amount starting April. Build the buffer before the deduction hits, not after. - Step 4: In late May, contact your company's HR or payroll department and ask for the *jūminzei getsugaku* (住民税月額), the confirmed monthly deduction amount. Any competent payroll team will have this number by late May. - Step 5: When your June payslip arrives, locate the 住民税 line and confirm it matches the figure HR provided. If the numbers diverge by more than a few hundred yen, flag it immediately.

Honestly, most HR departments at larger companies handle this smoothly and can tell you the exact amount if you ask directly. At smaller companies, particularly those without a dedicated payroll person, the staff may be unfamiliar with explaining the system to foreign employees. In that case, contact your local municipal tax office directly with your employee ID or My Number and they can confirm your assessment.

If you receive a paper tax determination notice (住民税決定通知書) at home and cannot read it, the Resident Tax Notice Decoder translates the key fields so you understand exactly what you owe and why.

Your next step: before June arrives, pull your gensen chōshū-hyō, run the estimate calculation above, and contact HR to confirm the exact deduction amount. Do not wait for June to tell you what happened.

Why do I pay resident tax through my employer instead of paying it myself? For salaried employees, Japanese law requires employers to withhold resident tax and remit it directly to the municipality. This is called *tokubetsu chōshū* (special collection). It is mandatory for most full-time employees. You do not opt in. Your employer handles it automatically once they receive the municipal deduction notice each spring.

What if I was only in Japan for part of my first year? Is my resident tax lower? Possibly, but it depends on whether you were registered as a resident in Japan on January 1st of the assessment year. Resident tax liability is determined by your registration status on that specific date. If you arrived and registered after January 1st of your first year, you owe no resident tax that cycle. Your first bill hits the following June based on your subsequent full-year income.

Can resident tax unpaid by a previous employer affect my visa renewal? Based on common experience reported by foreign residents and immigration practitioners, municipalities can flag outstanding tax debts, and some visa renewal and PR application processes include requests for tax payment certificates (*nōzei shōmei sho*). Unpaid resident tax can create complications. Paying promptly and keeping proof of payment is the practical default position.

If you want to confirm exactly what your payslip is deducting each month, the Payslip Decoder reads standard Japanese payslip fields and explains what each line means in plain English. When your June paycheck drops and you are staring at a row of kanji you cannot parse, that tool tells you what is actually being taken and whether the 住民税 amount matches what your municipality calculated.