"They told me my salary was ¥300,000, but only ¥230,000 was actually deposited..."
This is what every foreigner working in Japan for the first time experiences. Your payslip lists every detail of what's deducted from your gross pay (gakumen) — social insurance and taxes.
This guide walks through what each line on your payslip means, the 2026 rates, the "second-year drop in take-home" mystery, and tax-saving systems worth knowing — all from the perspective of foreign residents.
The 3 sections of a payslip
A Japanese payslip is divided into three blocks.
| Block | Contents |
|---|---|
| Attendance (kintai) | Days worked, hours, overtime, paid leave used |
| Payments (shikyū) | Base salary, overtime pay, commute allowance, benefits = gross pay |
| Deductions (kōjo) | Social insurance + income tax + resident tax = total withheld |
Net take-home pay = Gross pay − Total deductions
This is the amount actually deposited in your bank account.
What's deducted — where does the ¥70,000 go?
For a single person earning ¥3.6 million annually (¥300,000 monthly), here's the typical monthly breakdown.
| Item | Approximate amount | What it pays for |
|---|---|---|
| Health insurance | About ¥14,800 | Reduces your share of medical costs |
| Employees' Pension | About ¥27,500 | Old age, disability, and survivor pensions |
| Employment Insurance | About ¥1,500 | Unemployment and parental leave benefits |
| Income tax | About ¥6,500 | National tax |
| Resident tax | About ¥13,000 | Prefecture and city taxes |
| Total | About ¥63,300 | (Take-home about ¥236,700) |
People aged 40 and over also pay Long-term Care Insurance (about ¥2,400).
1. Health insurance (Kyōkai Kenpō / company health unions)
Insurance that drops your medical co-payment to 30% (see "Getting Sick in Japan" for details).
2026 rates
For Kyōkai Kenpō (used by most small and mid-sized companies), the 2026 (Reiwa 8) national average:
- Medical portion: 9.90% (split with the employer; your share is 4.95%)
- Long-term care portion (ages 40–64): +1.62% (your share is 0.81%)
For a ¥300,000 monthly salary: ¥300,000 × 4.95% = about ¥14,850
Rates vary by prefecture: in 2026, Saga is highest at 10.55%, Niigata lowest at 9.21%.
Large-company health unions (kenpo kumiai) set their own rates and offer extra benefits. They're often cheaper than Kyōkai Kenpō and offer richer supplemental benefits (such as additional support for high-cost medical bills). Check your payslip.
2. Employees' Pension (Kōsei Nenkin)
Insurance covering three protections: old-age pension (from age 65), disability pension, and survivor pension.
Rate
18.3% (split with the employer; your share is 9.15%). Fixed since 2017, unchanged in 2026.
For a ¥300,000 monthly salary: ¥300,000 × 9.15% = about ¥27,450
Will foreigners receive a pension?
Yes — if you meet the conditions. Basic eligibility requires 10+ years of contribution. Many countries have a Social Security Agreement with Japan that lets you combine contribution periods from your home country.
Lump-sum withdrawal at departure
If you leave Japan with under 10 years of contributions, you can claim a Lump-sum Withdrawal Payment (worth up to 60 months of contributions). Apply to the Japan Pension Service within 2 years of departure.
3. Employment Insurance (Koyō Hoken)
Insurance providing benefits during unemployment, parental leave, and family-care leave.
2026 rates (general industries)
- Total: 1.35% (Reiwa 8, down 0.1% from Reiwa 7)
- Worker share: 0.5%
- Employer share: 0.85%
For a ¥300,000 monthly salary: ¥300,000 × 0.5% = ¥1,500
Unemployment benefits
For employer-initiated termination, "basic benefits" begin immediately; for self-initiated termination, after about a 2-month waiting period. Amount is 50–80% of your prior salary; duration depends on your contribution period and age (90–330 days).
4. Income tax (Shotokuzei)
National tax. Progressive — the more you earn, the higher the rate.
Rates (2026)
| Taxable income | Rate |
|---|---|
| Up to ¥1,950,000 | 5% |
| Up to ¥3,300,000 | 10% |
| Up to ¥6,950,000 | 20% |
| Up to ¥9,000,000 | 23% |
| Up to ¥18,000,000 | 33% |
| Up to ¥40,000,000 | 40% |
| Over ¥40,000,000 | 45% |
Special Reconstruction Income Tax
An additional 2.1% of your income tax is collected as the Special Reconstruction Income Tax (funding 2011 earthquake recovery, until 2037).
Monthly withholding = "gensen chōshū"
Your monthly salary has tax withheld based on an estimate. At year-end, the year-end adjustment (nenmatsu chōsei) reconciles any over- or underpayment (in most cases, you receive a refund in your December or January paycheck).
5. Resident tax — "the second-year trap"
This is the part that confuses most foreigners.
How it works
Resident tax is calculated based on the prior year's income (January–December) and deducted in 12 monthly installments from June through May the following year (called "special collection," tokubetsu chōshū).
Why your take-home drops in year 2
- Year 1: No prior-year income in Japan, so resident tax is zero or minimal
- Year 2 (from June): Resident tax based on year-1 income starts being deducted, lowering your take-home
"My salary didn't go up, but my take-home seems lower" — this is the cause.
Rates
- Income-based portion: flat 10% (4% prefecture + 6% city)
- Per-capita portion: ¥5,000/year (¥1,000 prefecture + ¥3,000 city + ¥1,000 Forest Environment Tax)
For a single person earning ¥3.6 million, this works out to roughly ¥150,000–170,000 per year, or ¥12,500–14,200 deducted monthly.
Resident tax when you leave Japan or quit
Because it's based on prior-year income, in your departure year you may be billed all at once for "the prior full year" plus "January through your departure month." Either appoint a "tax agent" before leaving or pay the full amount in advance. Leaving without doing this can result in collection notices reaching you in your home country.
Bonuses and tax
Most companies pay bonuses (shōyo) in summer (June–July) and winter (December). Common amounts are 2–4 months of salary per year (varies by industry and company).
Social insurance and income tax are also deducted from bonuses (resident tax is collected only with regular monthly pay). A ¥400,000 bonus typically nets about ¥320,000.
Tax-saving systems worth knowing
1. furusato nōzei
Donate to a local government of your choice. Income tax and resident tax are reduced, and you receive regional specialty gifts in return (rice, meat, fruit, etc.).
- Out-of-pocket: ¥2,000 per year only
- Limit: Depends on income and family (about ¥60,000/year for a single person earning ¥5 million)
- One-stop exemption: No tax return needed (5 cities or fewer; salaried workers only)
- Eligibility: Available to foreigners as long as you pay Japanese income and resident tax
Easy to use through sites like Furunavi, Satofull, or Rakuten Furusato Nōzei.
2. Medical expense deduction
If your annual medical costs (Jan–Dec) exceed ¥100,000, you can lower income and resident tax by filing a tax return. You can combine the entire family's expenses. Even over-the-counter medications may qualify. Keep receipts.
3. iDeCo (individual defined contribution pension)
You set the contribution amount, invest it yourself, and receive a pension in retirement. The full contribution is income-deductible, lowering income and resident tax. From ¥5,000/month. Limits: up to ¥68,000/month for self-employed; ¥12,000–23,000/month for employees (depending on company pension).
4. NISA
A system that makes investment gains (dividends, capital gains) tax-free. The new NISA started in 2024, with annual limits of ¥1.2 million in the "tsumitate" portion + ¥2.4 million in the "growth" portion (¥3.6 million per year total). Effective for long-term wealth building.
5. Life insurance and earthquake insurance deductions
If you have private life or earthquake insurance, you can claim deductions during year-end adjustment. Insurers send a "deduction certificate" in autumn — submit it with your year-end paperwork.
6. Spouse and dependent deductions
If you support a spouse or dependent earning under ¥1,030,000 (salary income), your tax is reduced. Family members in your home country (16+) may also qualify if you can prove remittance records ("dependent deduction for non-resident relatives," with extra requirements for those aged 30–69).
Who needs to file a tax return?
Most employees finish with year-end adjustment, but the following must file their own return (every year February 16 – March 15):
- People earning over ¥20 million
- People with side income over ¥200,000/year
- People with stock, crypto, or real estate income (except brokerage withholding accounts)
- Anyone wanting to claim medical expense deductions or furusato nōzei (6+ municipalities)
- First year of mortgage tax credit (year 2 onward can be done via year-end adjustment)
- People with salary from two or more sources
FAQ
Q. Am I covered by social insurance during my probation period?
A. Yes, generally. Even during probation, if you're scheduled for permanent employment, you must be enrolled from day one (check your labor contract). Failure to enroll is likely illegal — consult the Labor Standards Inspection Office.
Q. Can I throw away my payslips?
A. Keep them for at least 2 years. They're often needed for tax audits, tax returns, unemployment benefits, loan applications, and proving income at job changes. Save the paper or PDF.
Q. What is a "withholding tax certificate" (gensen chōshū-hyō)?
A. A document summarizing the year's salary, tax, and insurance. You receive it in January (or upon resignation). Required for tax returns, loan applications, and daycare applications. Store it carefully.
Q. Do part-time and casual workers also enroll in social insurance?
A. Generally yes if all of these apply:
- 20+ hours per week
- Monthly salary ¥88,000+ (¥1,060,000+/year)
- Expected employment over 2 months
- Not a daytime student
The "¥1.06 million wall" and "¥1.30 million wall" people often discuss relate to these thresholds.
Q. Will my employer find out about my side income?
A. With special-collection resident tax, all income is bundled and reported to your main employer — likely revealing side income. On your tax return, choosing "self-payment" (jibun de nōfu) lets you pay the side-income tax yourself, making it harder to detect (but if your work rules ban side jobs, this can backfire).
Q. How do I check that overtime is being paid correctly?
A. Compare the "overtime pay" line on your payslip with your time-card or PC login records. The legal premium rates are:
- Overtime (over 8 hours/day): 1.25×
- Late night (22:00–5:00): 1.25× (1.5× if both apply)
- Statutory holiday work: 1.35×
- Over 60 hours of overtime in a month: 1.5×
If you suspect underpayment, consult the Labor Standards Inspection Office (free) or a lawyer.
Q. What happens to insurance and pension when I change jobs?
A. Social insurance is automatically transferred between employers. If there's a gap between leaving and starting, you must enroll yourself in National Health Insurance + National Pension (at the ward office) for that period. Apply for unemployment benefits at Hello Work after receiving your separation notice.
Q. What about taxes if I'm temporarily abroad on assignment?
A. You become a "non-resident" taxpayer, with income tax only on Japan-source income (generally 20.42% withholding). Resident tax is determined by whether you have a Japan address on January 1. Appointing a tax agent before leaving is strongly recommended.
Final thoughts
Your payslip looks like code at first, but once you understand the structure, you start to see "what you're paying" and "what you'll receive in the future." Things to do today:
- Pull out one of your payslips and identify each line
- Try furusato nōzei at one location (¥2,000 out-of-pocket for regional gifts)
- Save your withholding tax certificate in one place (one per year)
- Check your pension records on "Nenkin Net" (Japan Pension Service)
Don't give up with "taxes are too high" — knowing the systems and using them can boost your take-home by tens of thousands of yen per year.
At Nihongo-tomo, we offer free vocabulary lists for salary, taxes, and social insurance. Learning words like "gensen chōshū" (withholding), "nenmatsu chōsei" (year-end adjustment), and "fuyō kōjo" (dependent deduction) ahead of time makes paperwork with HR much easier.
References / 参考・出典
- Japan Health Insurance Association (Kyōkai Kenpō) — Reiwa 8 Premium Rates — 2026 health insurance rate 9.90% / long-term care 1.62%
- Japan Pension Service — Employees' Pension Premium Table — Employees' Pension 18.3% (split with employer)
- MHLW — Reiwa 8 Employment Insurance Rate Guide — General industry 1.35%
- Ministry of Internal Affairs — Individual Resident Tax — Basis for 10% income portion / ¥5,000 per-capita portion
- National Tax Agency — Income Tax Rates — Progressive rates
- Ministry of Internal Affairs — furusato nōzei Portal — Limits and one-stop exemption
- National Tax Agency — Medical Expense Deduction
- iDeCo Official Site / Financial Services Agency — NISA Site
- Japan Pension Service — Lump-sum Withdrawal Payment for Foreigners
- Japan Pension Service — Nenkin Net — Check your contribution records
All figures and rates in this article are based on fiscal year 2026 (Reiwa 8) information. Rates change annually — confirm the latest figures on each agency's official site.