Understanding Japan’s Tax Deductions: A Guide to Calculating Your Potential Refund

For many residents in Japan, navigating the annual tax process is a key part of managing personal finances. A crucial element of this is understanding personal deductions, such as those for supporting dependents (fuyō kōjo), which can significantly impact your final tax liability and the amount of any potential refund.

This guide provides a clear, factual breakdown of how these deductions work, based on the regulations and data published by the Japan National Tax Agency (国税庁).

Disclaimer: This article provides general information for educational purposes only and does not constitute professional tax advice. Tax laws are subject to change, and individual circumstances vary. Please consult with a certified tax professional for guidance specific to your situation.

How Tax Savings are Calculated in Japan

The total reduction in your tax from a deduction comes from two separate sources: National Income Tax and Local Resident Tax.

1. National Income Tax Saving: This saving is variable and depends on your income. Japan’s progressive tax system means a deduction provides savings at your highest applicable tax rate (from 5% to 45%).
2. Local Resident Tax Saving: This saving is a fixed amount. It is calculated at a flat 10% rate on the specific Resident Tax Deduction amount, regardless of your income bracket.

Your total annual tax saving is the sum of these two components.

Focus: The Fixed Value of Resident Tax Savings

Before looking at the combined total, it’s helpful to see the constant value provided by the Resident Tax saving for each deduction. This amount is the same for every taxpayer, from the lowest to the highest income bracket.

Table 1: Fixed Annual Resident Tax Saving per Deduction
This table shows the precise, fixed saving on your local taxes for each major personal deduction.

Japan’s National Income Tax Brackets

The other part of your saving—the Income Tax portion—is determined by your marginal tax rate.

Comprehensive Breakdown: Total Annual Tax Saving (Income + Resident Tax)

The main table below combines the variable income tax saving with the fixed resident tax saving (from Table 1) to show your total potential tax reduction across every bracket.

Additional Savings for Dependents with a Disability

If a dependent has a certified disability, an additional deduction is applied. The Resident Tax portion of this saving is also a fixed amount.

Table 2: Fixed Annual Resident Tax Saving for Disability

The table below shows the total additional saving when combined with the variable income tax saving.

Conclusion: Ensuring You Claim Eligible Deductions

Filing taxes accurately is a responsibility for all residents. Part of that is ensuring you claim all the deductions for which you are eligible, as this affects the calculation of both your national and local taxes. We hope this guide serves as a helpful resource in understanding how these deductions are valued.

Official Sources from the Japan National Tax Agency (NTA)

The information and figures presented in this article are based on the tax laws of Japan. For direct reference, please consult the official pages from the National Tax Agency (国税庁).

• On Income Tax Rates: No.2260 Income Tax Rates (所得税の税率)
• On Personal Deductions: No.1180 Dependent Deduction (扶養控除) and other relevant pages for Spouse, Basic, and Disability deductions.