What Other Deductions Are Taken From My Monthly Salary In Japan?
As a follow up to our previous article A Basic Guide to Income and Resident Tax in Japan many of our readers asked us to explain what other deductions they are liable for. In this article, we will explore some of the most common additional deductions employees will see in their monthly payroll slip.
Please note this list is not absolute but covers the vast majority of deductions for salaried employees in Japan. If you are not sure about your particular deductions or require further explanation then your first point of contact should be your manager or your company payroll personnel.
Lets get started with the 4 main deductions in addition to Income Tax and Resident Tax that most of you will see in your monthly payslip.
- 健康保険 kenko hoken Health Insurance:
Every full time employee is required to be enrolled. The insurance rate depends on which insurance provider your employer has signed with.
協会けんぽ kyokai kenpo Health Insurance Association is the most common provider that companies use.
Interestingly many prefectures have a different insurance rate. Assuming your company is registered in Tokyo prefecture then as of January 2020, the amount an employee contributes is 4.95% of the income bracket they fall into. (Even if you are a Chiba or Saitama resident, the Tokyo rate will be applied if your employer’s registered address is Tokyo.)
- 厚生年金 kosei nenkin Workers Pension:
Every full time employee is required to be enrolled. The employee contributes 9.15% of the income bracket they fall into.
You can claim the pension at age 65 if you have made pension contributions for at least 10 years. For those of you who leave Japan having contributed less than 10 years you can file a refund request. The refund you receive can be up to 36 months depending on various factors.
- 介護保険 kaigo hoken Nursing Care Insurance:
This is deducted for those who are over 40 years old and is calculated on 0.865% of your income bracket
For all the above deductions please contact your payroll administrator to find out your salary bracket for Health Insurance, Workers Pension and Nursing Care calculations or take a look at this chart Health Insurance Association Rate for Tokyo Companies to see which bracket you fall into and how much your deductions are. (sorry Japanese only)
- 雇用保険 koyo hoken Unemployment Insurance:
Every full time employee is required to enroll and the rate is calculated on 0.3% of your gross monthly income. Please note that Company Directors, Expat hires and Students are not eligible for this benefit. In addition, those who work under 20 hours per month also do not qualify for Unemployment Insurance
- 所得税 shotoku zei Income Tax:
Your residency status, marital status and number of dependents will affect your income tax. As mentioned in our previous article Japan has a progressive tax system so the more you earn the more tax you pay. Please refer to A Basic Guide to Income Tax in Japan
- 住民税 jumin zei Resident Tax:
This is calculated on 10% of your previous year’s income. If this is your first year living in Japan, you will not be required to pay this. Please refer to A Basic Guide to Resident Tax in Japan