Salary and tax in Japan

Where the money goes

Of ¥5,000,000 gross, income tax (所得税 / 住民税) takes ¥335,473 and employee contributions (厚生年金, 健康保険, and 雇用保険) take ¥735,354. That leaves ¥3,929,173 a year, or ¥327,431 a month on average.

The employer pays another ¥785,854 in charges on top, 15.7% of the salary. The whole job costs ¥5,785,854 a year.

How the income tax works

The income tax (所得税 / 住民税) rises through 7 bands, from 5% to 45%. The top rate applies from ¥40,000,000 of taxable income. That threshold is 8 times the reference salary of ¥5,000,000, so only high earners reach the top rate.

The bands apply to taxable income: what is left after allowances and deductible contributions. That is why the rates bite later than the gross salary suggests.

Employee contributions are capped in steps; capped parts stop rising at yearly salaries of about ¥7,780,000 and about ¥16,700,000.

How the rates rise with the salary

Some income tax is due from the first unit of salary.

At ¥5,000,000, 21.4% of pay goes to income tax and employee contributions. Of the next 100 earned, 75 reach the employee, a marginal rate of 24.7%.

At twice that salary, ¥10,000,000, the average rate is 27.3% and the marginal rate 34.5%.

The marginal rate is highest at a salary of about ¥14,500,000: 46.8%. At about ¥7,780,000, employee contributions reach a ceiling, and their share of each raise falls from 14.7% to 5.6%. At about ¥16,700,000, employee contributions reach a ceiling, and their share of each raise falls from 5.6% to 0.5%.

Average and marginal rates, with worked examples:
Pay rise: How much more take-home pay? (Japan)

Among 50 countries

At the same ¥5,000,000 a year, converted into each local currency, an employee in Japan takes home 78.6%, rank 29 of 50.

The same salary leaves the most in Taiwan (94.3%) and the least in Romania (58.5%).

Every country is calculated for the same single employee without children, with the salary converted at the exchange rates of October 2, 2026. A salary that is typical in one country is high in another, so progressive systems look heavier where wages are lower. The ranking says nothing about purchasing power or about what the contributions pay for, such as pensions and health cover. Where the newer rules are not final, a country is calculated with its latest enacted year: Belgium (2025), Norway (2025), and Romania (2025).

Recent rule changes

The model for Japan includes these recent changes.

• National income tax rates and brackets unchanged.
• Resident tax rate unchanged at approximately 10%.
• Social insurance (kōsei-nenkin/kenkō-hoken) remuneration grade ceilings revised upward by annual circular.

Beyond the payslip

The statutory rules in Japan on notice, unemployment, sick pay, parental leave and unpaid wages.

• Notice and dismissal

  労働基準法; 労働契約法

  30 days

  Notice period

  In principle the employer must give thirty days advance notice or the corresponding average-wage payment; statutory short-contract, initial trial and approved exceptional-dismissal rules apply.

• Unemployment benefit

  雇用保険 — 基本手当

  50–80%

  Benefit rate

  Basic allowance normally uses fifty to eighty percent of average wages in the six months before separation; ages sixty to sixty-four use forty-five to eighty percent, with statutory floors and caps.

• Sick pay

  健康保険 — 傷病手当金

  2/3

  Benefit rate

  Daily allowance is two thirds of the applicable average standard monthly remuneration converted to a daily amount, generally using the preceding twelve months.

• Parental leave

  育児休業給付金; 出生後休業支援給付金

  67% / 50%

  Benefit rate

  Employment-insurance childcare-leave benefit uses sixty-seven percent of the pre-leave wage basis for the first one hundred and eighty days and fifty percent afterwards, subject to caps and earnings conditions.

• Unpaid wages

  未払賃金立替払制度

  80%

  Benefit rate

  JOHAS advances eighty percent of eligible unpaid regular wages and retirement allowances after qualifying employer insolvency, subject to limits based on age at retirement.

Method and sources

Official sources

• 国税庁
• 日本年金機構
• Euro reference exchange rates, October 2, 2026 (ECB)