Two taxes come out of a Japanese salary, and they behave differently. The second one catches almost every new arrival.
This is general explanation rather than advice for your situation. Confirm with your employer or your municipal office - and note that rules change.
Income tax (所得税)
Deducted from each month’s pay by your employer, at a rate based on your earnings.
At the end of the year your employer usually performs a year-end adjustment (年末調整), reconciling what was withheld against what you actually owed. If too much was withheld, you get a refund - typically in a December or January payslip.
You will be asked to complete a form for this, declaring dependants and certain insurance payments. Fill it in properly; it is where refunds come from.
Residence tax (住民税) - the one that surprises people
This is the important paragraph.
Residence tax is levied by your municipality and is based on last year’s income. In your first year in Japan you have no previous Japanese income, so you pay little or none.
In your second year, it starts - based on a full year of earnings. Workers who have budgeted around their first-year take-home pay find their monthly net income drops noticeably, with no change in salary or hours.
Plan for it. Ask your employer when residence tax will begin for you and roughly what it will be.
It also matters when you leave: residence tax can still be owed for the year in which you depart, and you may need to appoint someone to handle it.
Dependants abroad
If you support family in your home country, you may be able to claim dependant deductions - but the documentation requirements have tightened considerably and now demand evidence of both the relationship and the remittances.
Keep the receipts for every transfer: sending money home.
What you must keep
- Every payslip (給与明細)
- The annual withholding statement (源泉徴収票) your employer gives you each year
- Remittance records if you claim dependants abroad
These are needed for visa renewals, for any tax filing, and for the pension lump-sum claim if you leave. Renewing your status.
Do not ignore a tax notice
If something arrives from the municipal office and you cannot read it, take it to your employer or your registered support organisation - supporting you with administrative procedures is part of their obligation. Registered support organisations.
Unpaid taxes and unpaid social insurance are checked at renewal. This is the practical reason to take it seriously, quite apart from the law.
Where it fits with everything else
Tax, health insurance and pension and rent together turn a gross salary into a very different net one. Work out the real number before you accept an offer: salary and deductions and the contract checklist.