Japan

In Japan, permanent resident taxpayers are subject to income tax on their worldwide income. Non-resident taxpayers are taxed only on their Japan-sourced income. Non-permanent resident taxpayers are taxed on Japan-sourced income and foreign-source income only to the extent that it is paid in Japan or remitted to Japan.

Personal income tax rates

The current national income tax rates are:

The tax liability is determined by multiplying the excess taxable income for each bracket by the percentage above and adding the cumulative tax figure (see the Sample personal income tax calculation section for more information).

Surtaxes

A surtax has applied since 1 January 2013. It is calculated as 2.1% of an individual’s national income tax.

Minimum tax on high-income individuals

Effective from tax year 2025, a minimum tax may apply to certain high-income individuals. This measure is intended to ensure a minimum level of income tax for taxpayers whose effective tax burden may be relatively low since a substantial portion of their income is subject to separate taxation at flat rates, such as capital gains arising from the sale of shares.

For tax years 2025 and 2026, where the individual’s aggregate income amount exceeds JPY 330 million of the threshold, the minimum tax is computed as 22.5% of the excess over JPY 330 million. If this minimum tax amount exceeds the individual’s regular income tax liability for the year, the excess is imposed as additional income tax.

From tax years 2027 onwards, the threshold is reduced from JPY 330 million to JPY 165 million and the minimum tax rate is increased from 22.5% to 30%. These changes will expand the reach of the minimum tax to a wider range of high-income individuals.

Local income taxes

Generally, in Japan, the local inhabitant’s tax is imposed at a flat rate of 10%. Japanese local governments (prefectural and municipal governments) levy local inhabitant’s tax on a taxpayer’s prior year income. This applies when the taxpayer is a resident of Japan as of January 1 of the current year.

For local inhabitant’s tax purposes, an equalisation per capita tax is also imposed. The standard annual amount is JPY 5,000, although this may vary based on the prefecture and municipality in which the taxpayer resides.

Japan’s forest environmental tax is a national tax introduced to support the sustainable management and conservation of forests across the country. Launched in 2024, the tax aims to address issues such as forest degradation, climate change, and the declining forestry workforce. Every resident in Japan, including foreign nationals, is required to pay an annual fixed amount of JPY 1,000 as part of their local inhabitant tax.

Local inhabitant’s tax is not deductible.

Non-residents

A non-resident taxpayer’s Japan-source employment income is subject to a flat 20.42% national income tax on gross compensation, with no deductions available. This rate includes 2.1% of the surtax described above (20% × 102.1% = 20.42%). A non-resident taxpayer may be subject to the local inhabitant’s tax at a rate of 10% if they are registered as a resident on the local municipality ledger as of 1 January of the following year.