Rules of
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Japanese Taxation System Taxation of Foreign Nationals Income Tax Income Tax Returns Tax Deductions Income from Wages and Salaries Inhabitant’s Tax Consumption Tax and Local Consumption Tax Stamp Tax End of Year Tax Adjustments << Back to English Index << HOME

Income Tax Income tax is a tax paid by individuals in proportion to income earned each year (from January 1 to December 31). The Income Tax Law takes into consideration each taxpayer’s ability to pay, creating 10 tax brackets and setting down a method of calculation for each. Income taxes are calculated by applying the formula in the table below to a person’s taxable income, which is calculated by deducting basic, spousal, and dependent deductions and the like from total income ( >> Tax Deductions ). Taxable Income Rate Deduction Amount ～1,949,000 yen 5% 0 yen 1,950,000yen～3,299,000 yen 10% 97,500 yen 3,300,000 yen～6,949,000 yen 20% 427,500 yen 6,950,000 yen～8,999,000 yen 23% 636,000 yen 9,000,000 yen～17,999,000 yen 33% 1,536,000 yen 18,000,000 yen 40% 2,796,000 yen In a process referred to as gensen choshu, income taxes are often withheld at the source from salaried workers’ salaries and wages. In this case, the employer pays the employee’s taxes in advance, and provides the employee with an annual withholding certificate.