Take-Home Pay in Japan Explained: Taxes and Insurance (2026)

Your take-home pay in Japan is your gross salary minus five main deductions: health insurance, employees' pension, employment insurance, income tax and resident tax. For a full-time employee under 40, the employee's share of social insurance alone is roughly 15% of salary under the most common rates in 2026. Income tax and resident tax come on top, and they depend on your income and deductions.

Many foreign engineers are surprised when their first payslip is lower than expected, or when resident tax suddenly starts in their second year. This guide explains how each deduction works, with official rates and the date each rate applies. It is general information, not tax advice.

All rates are as of October 2026. Rates change, often every April (or March for health insurance), so always check the latest official figures.

Key takeaways

• Social insurance (health, pension, employment insurance) is taken from every payslip and is usually split with your employer.

• Employees' pension is 18.3% of your standard monthly remuneration, split half and half: you pay 9.15%.

• Income tax is withheld monthly and corrected at year-end adjustment in December.

• Resident tax is based on last year's income, so it usually starts in June of your second year in Japan.

• Bonuses are also subject to social insurance and income tax.

What is deducted from a Japanese payslip?

A typical payslip for a full-time employee shows these deductions. Social insurance premiums are calculated first; income tax is calculated after social insurance is subtracted.

Workers' accident insurance (rosai) also covers you, but your employer pays all of it. You will not see it on your payslip.

How is health insurance calculated?

Health insurance is a percentage of your "standard monthly remuneration," and you pay half. The rate depends on your insurer and, for the Japan Health Insurance Association (Kyokai Kenpo), on the prefecture.

Example rates for FY2026 (Kyokai Kenpo)

These rates apply from the March 2026 payroll month (paid in April). On top of this:

• Long-term care insurance: 1.62% nationwide for people aged 40 to 64 (you pay half, 0.81%).

• Child and childcare support levy: 0.23% nationwide from the April 2026 payroll month (paid in May), split half and half (0.115% each).

Large companies often have their own health insurance society with different rates. Check your payslip or ask HR.

What is standard monthly remuneration?

It is your monthly pay (including allowances such as commuting and overtime) placed into a fixed band. It is usually decided from your average pay in April, May and June, and it applies from September to the following August. It can change mid-year if your fixed pay changes a lot.

How much is employees' pension?

Employees' pension is 18.3% of your standard monthly remuneration, and you and your employer each pay half, so your share is 9.15%. The rate has been fixed at 18.3% since September 2017, according to the Japan Pension Service. The standard monthly remuneration for pension ranges from ¥88,000 (grade 1) to ¥650,000 (grade 32), so contributions stop rising above that level.

Your nationality does not matter: regular employees of a corporation must join, whatever the company size. If you leave Japan before qualifying for a pension, you may be able to claim a lump-sum withdrawal payment. See pension lump-sum withdrawal in Japan. Official information: Japan Pension Service.

How much is employment insurance?

For most industries, the employee pays 0.5% of wages for employment insurance in FY2026 (1 April 2026 to 31 March 2027). The employer pays more. This is lower than FY2025, when the employee share was 0.55%.

Employment insurance is calculated on actual wages paid, including overtime and bonuses. You are covered if you work 20 hours or more a week and are expected to be employed for 31 days or more.

How is income tax calculated and withheld?

Income tax is withheld from each payslip using an official table, and the final amount is fixed at year-end adjustment in December. The yearly calculation works like this:

1. Employment income = annual salary − employment income deduction.

2. Taxable income = employment income − income deductions (basic deduction, social insurance premiums you paid, dependants, etc.).

3. Income tax = taxable income × rate − fixed deduction (see the table).

4. Add the special reconstruction income tax (2.1% of the income tax).

Employment income deduction (2025–2027)

For annual salary between ¥3.6 million and ¥6.6 million, the deduction is salary × 20% + ¥440,000. Between ¥6.6 million and ¥8.5 million, it is salary × 10% + ¥1.1 million. Above ¥8.5 million, it is capped at ¥1.95 million. The minimum deduction was raised for 2025, and again for 2026 and 2027 (to ¥740,000), which mainly helps lower incomes.

Income tax rates

Source: National Tax Agency, Tax Answer No. 2260 (laws as of 1 April 2026).

The basic deduction changed in 2025 and 2026

The basic deduction depends on your total income. For 2026, the National Tax Agency lists ¥1.04 million for total income up to ¥4.89 million, ¥670,000 for ¥4.89–6.55 million, and ¥620,000 for ¥6.55–23.5 million. The 2026 amounts take effect on 1 December 2026, so they are reflected in the 2026 year-end adjustment. For 2025, the amounts were lower (for example, ¥580,000 for total income ¥6.55–23.5 million).

Reconstruction tax and the 2027 change

The special reconstruction income tax is 2.1% of income tax through 2037. For income from 1 January 2027, the National Tax Agency says it falls to 1.1%, and a new 1% defence special income tax is added.

Year-end adjustment

In December, your employer recalculates your yearly tax using your final salary and deductions. If too much was withheld, you get money back in December or January pay. If you changed jobs during the year, give your previous employer's withholding slip (gensen choshu-hyo) to your new employer.

How does resident tax work?

Resident tax is a local tax based on your income in the previous calendar year, paid to the municipality where you lived on 1 January. Because of this one-year delay, people in their first year in Japan usually pay no resident tax until June of the following year.

Some municipalities set slightly different amounts. Resident tax uses its own deductions, which are not the same as income tax deductions (for example, the basic deduction for resident tax is ¥430,000).

How it is paid

For employees, the usual method is special collection: your employer deducts it from salary in 12 monthly payments from June to the following May. Otherwise, you pay it yourself (ordinary collection) with payment slips, usually in four instalments. The Ministry of Internal Affairs and Communications explains this in its resident tax page in English. For job changes, read resident tax when changing jobs.

What does a simple example look like?

Here is a simplified example of the employee's social insurance share, using official FY2026 rates. Assume an employee in Tokyo, under 40, insured with Kyokai Kenpo, with monthly pay of ¥400,000. For easy maths, assume the standard monthly remuneration is also ¥400,000 (real bands are set in steps).

If the same employee were 40 to 64, long-term care insurance (0.81%) would add ¥3,240.

After this, income tax is withheld from the remaining amount using the official table, and resident tax is deducted from June if you had income in Japan last year. The exact tax depends on your deductions and dependants, so we do not show a single "net pay" number. Ask your employer for a sample calculation before you sign.

How AGG can help

AGG (Awaji Global Gateway, a division of Fukuyoshi Inc.) lists English-OK engineering jobs in Japan. Many are dispatch roles: you are employed by Fukuyoshi Inc., you are enrolled in social insurance, and income tax and resident tax are handled through payroll. Before you accept a job, we explain the main deductions in writing so you know what to expect. There are no agency fees for job seekers.

Frequently asked questions

Q. How much tax do you pay on salary in Japan?

It depends on your income and deductions. Income tax uses progressive rates from 5% to 45% on taxable income, plus a 2.1% reconstruction surtax on the tax amount. Resident tax is usually 10% of last year's taxable income plus small fixed amounts. On top of tax, social insurance takes roughly 15% of salary for an employee under 40 under common 2026 rates. Ask your employer for a sample payslip before signing.

Q. Why is there no resident tax in my first year in Japan?

Resident tax is based on income from the previous calendar year (January to December) and charged by the municipality where you lived on 1 January. If you had no Japanese income last year, there is usually nothing to charge. It typically starts in June of your second year and is then deducted monthly from June to the following May. Budget for this drop in take-home pay in advance.

Q. What is the employees' pension rate in Japan?

The employees' pension rate is 18.3% of your standard monthly remuneration, fixed since September 2017. You and your employer each pay half, so your share is 9.15%. The standard monthly remuneration for pension is capped at ¥650,000, so contributions do not rise above that. Nationality does not matter. If you leave Japan before qualifying for a pension, you may be able to claim a lump-sum withdrawal payment.

Q. What is the health insurance rate in Tokyo in 2026?

For the Japan Health Insurance Association (Kyokai Kenpo), the FY2026 health insurance rate in Tokyo is 9.85%, applied from the March 2026 payroll month. You pay half (4.925%). If you are 40 to 64, long-term care insurance of 1.62% (half each) is added. The child and childcare support levy of 0.23% (half each) applies from the April 2026 payroll month. Company health insurance societies have their own rates.

Q. What is the employment insurance rate for employees in 2026?

For general industries, the employee share is 0.5% of wages from 1 April 2026 to 31 March 2027, down from 0.55% the year before. Construction and agriculture/forestry/fisheries/sake brewing have a slightly higher employee share of 0.6%. Employment insurance is calculated on actual wages, including overtime and bonuses, so the amount changes month to month. You are covered if you work 20 hours or more a week.

Q. Are bonuses taxed in Japan?

Yes. Bonuses are subject to income tax withholding, and health insurance, pension and employment insurance are also charged on bonuses. Health insurance and pension use the "standard bonus amount," with upper limits. Because of this, the take-home share of a bonus is lower than many people expect. Check your bonus payslip to see each deduction, and include bonuses when you estimate yearly take-home pay.

Q. What is year-end adjustment in Japan?

Year-end adjustment (nenmatsu chosei) is the December recalculation of your yearly income tax by your employer. It uses your final salary and the deductions you report, such as dependants and insurance. If too much tax was withheld during the year, you get a refund through payroll. If you changed jobs, give your previous employer's withholding slip to your new employer.

Summary

• Take-home pay = salary − social insurance − income tax − resident tax.

• Employee social insurance is about 14.7% in the Tokyo, under-40 example using FY2026 rates.

• Income tax is withheld monthly and finalised at year-end adjustment; 2026 deductions changed from 1 December 2026.

• Resident tax is 10% of last year's taxable income plus ¥5,000 in fixed amounts, starting from your second June.

• Rates change often; check the official figures each year.

Want to know the real numbers for a specific role? Browse our open engineering jobs and apply — we explain pay and deductions before you decide, and there are no agency fees. Also see engineer salary in Japan.

Reviewed by

Naoya Mitani — Head of Business Operations, Awaji Global Gateway (Fukuyoshi Inc.). Supports foreign engineers moving into jobs in Japan, including visa changes and onboarding.