Japan Income Tax Brackets and the Reconstruction Surtax
Japan income tax rates run in seven progressive bands from 5 to 45 percent, and every band applies only to taxable income after deductions. A 2.1 percent reconstruction surtax sits on top of the computed tax through income year 2037.12
Procedures, fees, and requirements can change. Confirm current details at the National Tax Agency site. This article is general information, not tax advice; for your specific case, consult a licensed tax accountant (zeirishi).
Overview
Japan's national income tax, or 所得税 (shotokuzei, "income tax"), uses excess-progressive rates: income is sliced into bands and each slice is taxed at its own rate, so a higher band never re-taxes the slices below it.2 The bands are statute and apply nationwide; what varies by person is which band the top slice of income lands in.1
The seven-bracket table
The NTA bracket table (as of 2026-09; confirm current figures with the NTA) sets these bands on taxable income:1
| Taxable income (as of 2026-09) | Rate | Quick-calc deduction |
|---|---|---|
| Up to 1,950,000 yen | 5% | 0 yen |
| Up to 3,300,000 yen | 10% | 97,500 yen |
| Up to 6,950,000 yen | 20% | 427,500 yen |
| Up to 9,000,000 yen | 23% | 636,000 yen |
| Up to 18,000,000 yen | 33% | 1,536,000 yen |
| Up to 40,000,000 yen | 40% | 2,796,000 yen |
| Above 40,000,000 yen | 45% | 4,796,000 yen |
The table as a whole reflects the NTA rate page (as of 2026-09).1 The quick-calc column lets you compute tax as income times the band rate minus the deduction, which the next section demonstrates.
How to read a band: only the slice inside it is taxed at that rate
A reader with 5,000,000 yen of taxable income is not taxed at 20 percent on the whole amount. The first 1,950,000 yen is taxed at 5 percent, the next slice at 10 percent, and only the remainder at 20 percent.2 This is the meaning of 超過累進税率 (choka ruishin zeiritsu, "excess progressive rates").2
The marginal rate prices your next yen of income, not your whole year. Budget decisions about overtime or freelance work should use the marginal slice; describing your overall burden needs the effective rate computed below.
The reconstruction surtax
For income years 2013 through 2037, a 復興特別所得税 (fukko tokubetsu shotokuzei, "special income tax for reconstruction") of 2.1 percent of the base income-tax amount is filed and paid together with income tax, and it is also collected with withholding at source (as of 2026-09; confirm current figures with the NTA).23 It funds post-2011 earthquake and tsunami reconstruction measures.3
Practitioner sources describe a 2026 reform taking effect from January 2027: the combined surtax stays at 2.1 percent but splits into 1.1 percent reconstruction plus a new 1 percent defense surtax, with the reconstruction leg extended to 2047 (as of 2026-07-09).4 That change affects 2027 income onward, so a return filed in the February to March 2027 window for 2026 income still uses the flat 2.1 percent framing above; confirm the current NTA guidance before relying on the split.
The diagram shows the computation order the NTA uses: deductions first, bands second, surtax last (as of 2026-09).2
Marginal rate vs effective rate: a worked example
The two cases below are illustrative, computed from the NTA table with assumptions dated 2026-09-09. They use round taxable-income figures so the arithmetic is checkable; your own figure will differ once deductions apply.1
Case A: taxable income of 3,000,000 yen sits in the 10 percent band. Tax is 3,000,000 × 10% − 97,500 = 202,500 yen of base tax. The surtax is 202,500 × 2.1% = 4,252 yen after rounding, for a total of 206,752 yen.12 The effective rate on taxable income is about 6.9 percent, well below the 10 percent marginal slice.
Case B: taxable income of 5,000,000 yen sits in the 20 percent band. Tax is 5,000,000 × 20% − 427,500 = 572,500 yen of base tax. The surtax is 572,500 × 2.1% = 12,022 yen after rounding, for a total of 584,522 yen.12 The effective rate is about 11.7 percent against a 20 percent marginal slice.
The pattern holds at every level: the effective rate always sits below the marginal rate because the lower slices keep their lower rates.2 Anyone quoting a single percentage for Japan is either naming a marginal slice or averaging without saying so; ask which one before comparing with another country.
What the bands apply to: taxable income, not gross pay
Bands apply to 課税所得金額 (kazei shotoku kingaku, "taxable income amount"): total income by category minus the income deductions (basic, spouse, dependent, social-insurance, life-insurance, and others).2 A 5,000,000 yen salary is therefore never the input to the table; the input is what remains after the employment-income computation and the personal deductions come off.2
Freelance or other side income does not get its own rate. It joins employment income in the annual total, so a large side project can push the top slice into the next band.
The deduction-by-deduction detail, with amounts and thresholds, lives in the companion deduction guide built alongside this article. For now the concept is enough: shrink taxable income first, then read the table.
US persons and other foreign taxpayers
US citizens and US tax residents are taxed by the United States on worldwide income wherever they live, so Japan-side liability computed under the bands above can overlap with a US bill on the same income. Japan allows a foreign tax credit within statutory limits, which is the mechanism that softens the overlap.5
The credit has caps and ordering rules that turn on individual facts, and treaty positions add a second layer the bands alone cannot answer. Readers with US-source income, or income the treaty characterizes specially, should work through the US-Japan Tax Treaty guide and the cross-border advisor guide, and should put their own facts in front of a licensed zeirishi (tax accountant) before filing either return.5
A US person files in both countries on different forms and schedules, and the foreign tax credit needs proof of the Japan-side payment. Keep the Japanese assessment and payment receipts; the credit claim fails without them.
Why bands matter beyond the bill
Tax bands also price planning choices. Contributions to iDeCo come off taxable income, so each yen contributed saves tax at the contributor's marginal slice, not at an average rate. Gains sheltered inside the New NISA never enter the bands at all. And client-side withholding on freelance invoices is only a prepayment against whatever the bands finally produce at filing time.
Good to know
The 2027 surtax split does not change your 2026 filing
The reform detail applies from January 2027 income onward (as of 2026-07-09).4 A return covering 2026 income uses the flat 2.1 percent surtax, and withholding tables for 2026 salaries do the same. Confirm the current NTA guidance when the 2027 filing season approaches rather than pre-applying the split.
Bands move only when the statute moves; your band moves when your income moves
A bonus, a second payer, or a strong freelance quarter can push the top slice into the next band while every lower slice keeps its rate.2 This is normal excess-progressive behavior, not a penalty threshold, but it surprises readers who budget at last year's marginal rate.
Tax compliance feeds permanent residency screening
Proper performance of public duties including tax is a stated criterion for permanent residence, and even late-paid amounts count against the applicant in principle (as of 2026-02-24).6 Underpaying because a band was misread is still underpaying; keep the assessment notices and pay by the deadline.
See also
- US-Japan Tax Treaty: Mechanics and Pitfalls
- Hiring a Cross-Border Tax Advisor
- Side-Business While Employed: What's Allowed
- Blue-Form vs. White-Form Tax Returns
- The Financial and Tax Criteria for Permanent Residency
- The Deduction Stack: Basic, Spouse, Dependent, and Social Insurance