How Taxes Work in Japan for Foreigners (2026 Guide)

Understanding taxes in Japan is essential for foreign residents—whether you are an employee, student worker, freelancer, or long-term resident. Japan’s tax system is structured, predictable, and strictly enforced, but it can feel complex if you are unfamiliar with the rules.

This guide explains who must pay taxes, what types of taxes apply, how much you pay, and what to do each year, with key Japanese terms and pronunciation.

1. Do Foreigners Have to Pay Taxes?

Yes. Foreigners living or working in Japan are generally required to pay Japanese taxes, regardless of nationality.

Your obligations depend on:

• Length of stay

• Income source (Japan vs overseas)

• Residency status for tax purposes

Japan classifies residents into three tax categories.

2. Tax Residency Status (Very Important)

1. Non-Resident (非居住者 – hi-kyojūsha)

   • Lived in Japan less than 1 year

   • Taxed only on Japan-source income

   • Flat 20.42% withholding tax

2. Non-Permanent Resident (非永住者 – hi-eijūsha)

   • Lived in Japan less than 5 of the past 10 years

   • Taxed on:

     • Japan income

     • Overseas income only if remitted to Japan

3. Permanent Resident for Tax Purposes (永住者 – eijūsha)

   • Lived in Japan 5+ years

   • Taxed on worldwide income

⚠ Note: This “permanent resident for tax purposes” is different from immigration permanent residency.

3. Main Types of Taxes in Japan

A. Income Tax (所得税 – shotokuzei)

• Paid to the national government

• Employees: deducted automatically (源泉徴収 – gensen chōshū)

• Progressive rates (2026): 5% → 45% depending on income

B. Resident Tax (住民税 – jūminzei)

• Paid to city/prefecture

• ~10% of previous year’s income

• Billed the following year, usually monthly or quarterly

⚠ Many foreigners are surprised by resident tax in their second year

C. Social Insurance Contributions

• Usually deducted with taxes

• Includes:

  • Pension (年金 – nenkin)

  • Health Insurance (健康保険 – kenkō hoken)

• Mandatory for most workers

D. Consumption Tax (消費税 – shōhizei)

• Japan’s sales tax

• 10% on most goods/services

• Paid automatically when shopping

4. How Employees Pay Taxes

Most employees use salary withholding.

Key documents:

• Withholding slip (源泉徴収票 – gensen chōshūhyō): issued by employer in December

• Year-end adjustment (年末調整 – nenmatsu chōsei): employer recalculates taxes

If year-end adjustment is completed, no additional tax return is required.

5. Who Must File a Tax Return?

You must file a 確定申告 – kakutei shinkoku if you:

• Changed jobs mid-year

• Have side income or freelance income

• Earned income overseas

• Want to claim deductions

• Are self-employed

6. Tax Return Filing (確定申告 – kakutei shinkoku)

• Filing period: February 16 – March 15 each year

• Where:

  • Local tax office (税務署 – zeimusho)

  • Online via e-Tax (イータックス)

Documents needed:

• 源泉徴収票 (gensen chōshūhyō)

• Passport & residence card

• Bank details

• Receipts for deductions

7. Tax Deductions Foreigners Can Claim

Common deductions:

• Basic deduction (基礎控除 – kiso kōjo)

• Social insurance (社会保険控除 – shakai hoken kōjo)

• Dependent deductions (扶養控除 – fuyō kōjo)

• Medical expenses (医療費控除 – iryōhi kōjo)

• Life insurance premiums (生命保険料控除 – seimei hokenryō kōjo)

8. Freelancers & Side Income

Freelancers must:

• File an annual tax return

• Pay income tax + resident tax

• Possibly register as self-employed

Important: Some visas do not allow freelance work—immigration compliance is separate from tax compliance.

👉 Read more: Can Foreigners Work Freelance in Japan?

9. Overseas Income & Double Taxation

• Japan has tax treaties with many countries

• Prevents double taxation

• Foreign taxes paid may be credited

• Professional advice is recommended for complex cases

10. Consequences of Non-Payment

• Late payment fees

• Additional taxes

• Interest

• Potential visa renewal issues

Japan takes tax compliance very seriously.

11. Tips for Foreign Residents

• Keep all tax documents

• Save your 源泉徴収票 (gensen chōshūhyō)

• Expect resident tax in year two

• Ask your city office for English support

• Use a certified tax accountant if unsure

✅ Summary:
Foreign residents in Japan are required to pay taxes, but understanding residency status, tax types, and filing requirements makes the process manageable. Proper preparation helps you avoid penalties, plan finances, and comply with both immigration and taxation rules.