Resident Tax in Japan: Why It Starts in Your Second Year

What resident tax is

Resident tax (jūminzei, 住民税) is a local tax paid to your city and prefecture. It is about 10% of your taxable income plus a flat charge of ¥5,000 a year (which includes the ¥1,000 forest environment tax). It is separate from income tax (shotokuzei), which goes to the national government and is withheld from every paycheck from your first month.

Why it starts a year late

Two rules create the delay:

• Resident tax is calculated on your income for the previous January–December.
• It is charged by the city where you live on January 1, and collected from June to the following May.

So in your first calendar year in Japan there is nothing to charge you: you had no Japanese income the year before. Your first-year income is taxed from June of your second year, and your employer deducts it from your salary in 12 monthly installments until the following May.

How much, and when: two examples

¥300,000 a month in Tokyo, no bonus, under 40, no dependents

If you started in October, your first-year income was only three months' pay, which is below the tax-free threshold, so resident tax may not appear until your third year. Starting in April gives a smaller bill in year 2 (nine months of income) and the full amount from year 3.

Enter your own salary and start month in the take-home pay calculator to see your month-by-month figures for the first three years.

How you pay it

• Employees: your employer deducts it from your salary each month, June to May (special collection, tokubetsu chōshū). Around May or June you receive a notice from your employer showing the year's amount.
• Freelancers and people without an employer: the city mails you a bill, usually payable in four installments (typically June, August, October and January), or in one payment (ordinary collection, futsū chōshū).

Changing jobs or leaving Japan

• Changing jobs: the remaining installments can move to your new employer, or you pay them yourself. If you leave a job between January and April, the rest of the year's resident tax is normally deducted from your final salary.
• Leaving Japan: resident tax that has already been assessed is still owed after you leave, so pay it before you go or appoint a tax agent. If you leave before January 1, you are not charged resident tax on that year's income. See the Leaving Japan money checklist.