If you’re living and working in Japan as a foreigner, understanding residence tax, known locally as jūminzei (住民税), is essential for managing your finances and staying compliant with local laws. Residence tax is a local tax levied by your city or prefecture, based on your income from the previous year.
Even if you plan to leave Japan mid-year, or if you’re just starting your first job here, you may still be liable for this tax. Missing a payment can affect your visa status and future residency in Japan.
In this guide, we’ll walk you through everything you need to know about residence tax in Japan. You’ll learn about eligibility and calculation to payment methods, deductions, and ideas for reducing your tax burden.
What is Residence Tax?
Residence tax (住民税, jūminzei) is a local tax charged by the city or prefecture where you live as of January 1. It is separate from national income tax and helps fund local services such as schools, healthcare, and infrastructure.
Anyone with a registered address in Japan, including foreigners, is liable for residence tax if their income exceeds a certain threshold.
Residence tax consists of two main components:
- Income-based component – Calculated as a percentage of your taxable income.
- Per capita component – A fixed amount charged to all residents who meet the income requirement.
If you are a foreigner, you will not be taxed in the year you arrive in Japan, but if you are still living in Japan on January 1 of the following year, you will be taxed for the previous year’s income.
Even if you leave Japan before your tax bill arrives, you are still responsible for paying it.
Starting from FY2024, a small Forest Environment Tax is added to the per capita portion, slightly increasing the total annual tax.
How to Calculate Residence Tax in Japan
Residence tax is based on your previous year’s income (January 1 to December 31). The amount is determined through a series of steps:
Step 1: Calculate your total income
Add up your total income from the previous year. This includes salary, self-employment income, and other taxable earnings.
Step 2: Subtract deductions
From your total income, subtract allowable deductions such as:
- Social insurance premiums (health, pension, unemployment)
- Life insurance or earthquake insurance premiums
- Dependent or spouse deductions
- The basic deduction (¥430,000 for residence tax)
This gives you your adjusted income.
Step 3: Find your taxable income
Your taxable income is:
Taxable Income = Total Income – Deductions
Step 4: Apply the residence tax rate
Multiply your taxable income by the standard residence tax rate of 10% (6% municipal + 4% prefectural).
This gives you the income-based portion of your tax.
Step 5: Add the per capita portion
In addition to the income-based tax, all residents who meet the income threshold must pay a fixed annual charge.
From FY2024, this is ¥5,000 total:
- ¥3,000 municipal resident tax
- ¥1,000 prefectural resident tax
- ¥1,000 Forest Environment Tax
Step 6: Subtract any tax credits (if eligible)
Certain tax credits may reduce your residence tax, such as:
- Foreign tax credits (if you paid tax abroad)
- Credits for donations
- Housing loan credits
Most foreigners, however, pay the full amount without major credits.
How to Pay Residence Tax in Japan
There are two main ways to pay residence tax, depending on your employment situation:
1. Special Collection (Withholding from Salary
If you are employed full-time in Japan, your employer usually handles residence tax payments for you.
Each month, your company deducts the residence tax directly from your salary. The company then forwards the payment to your local municipal office.
You do not need to make payments yourself, but you will see the deductions on your monthly payslip.
2. Ordinary Collection (Self-Payment)
If you are self-employed, work part-time, or recently left a company, you will need to pay residence tax yourself.
Around June each year, your local municipal office sends a tax notice and payment slips (like the example image above). The annual tax is split into four installments, typically due in June, August, October, and January of the following year.
You can pay at banks, convenience stores, the post office, or sometimes online (depending on your municipality).
If you leave your job mid-year, your employer will stop withholding residence tax. You must then pay the remaining amount through the ordinary collection method, or ask your employer to deduct the balance from your final salary in one lump sum.
If you leave Japan before paying, you are still liable. You must either pay the tax before departure or appoint a tax payment manager (代理人) in Japan to handle your tax obligations on your behalf.
How to Reduce Residence Tax in Japan
While you cannot avoid residence tax entirely if you meet the income requirements, there are ways to lower the amount you owe through deductions and credits.
1. Take advantage of deductions
Certain expenses can be deducted from your income before residence tax is calculated. Common ones include:
- Social insurance premiums (pension, health, unemployment insurance)
- Life insurance and earthquake insurance premiums
- Medical expenses above a certain threshold
- Spouse or dependent deductions (if you are supporting family members)
- Basic deduction of ¥430,000 applied to all taxpayers
By reducing your taxable income, these deductions directly lower the income-based portion of residence tax.
2. Apply for tax credits
Tax credits are applied after your residence tax has been calculated and can reduce the final amount you pay. Examples include:
- Foreign tax credit – prevents double taxation if you already paid taxes abroad.
- Donation credits – available if you make contributions to recognized organizations, including the popular Furusato Nozei (hometown tax donation program).
- Housing loan credit – available under certain conditions if you bought property in Japan.
Do students working part-time need to pay residence tax?
Yes, students are not automatically exempt. If your part-time income exceeds the minimum taxable threshold (about ¥1,000,000 after deductions), you will be required to pay residence tax the following year.
If your earnings are very low, you may not owe any residence tax.
What happens if I don’t pay residence tax before leaving Japan?
Even if you leave Japan, you are still responsible for paying residence tax from your previous year’s income.
If you do not pay, your local municipal office can pursue collection, and it may cause problems with future visa applications or re-entry into Japan.
Can I get a refund if I paid too much residence tax?
Yes. If you overpay due to miscalculation, job changes, or early departure from Japan, you may be eligible for a refund. Refund claims are handled by your local municipal office.
You’ll need to submit proof of overpayment (such as payslips or tax certificates), and the refund is usually transferred directly to your Japanese bank account.
