Japan Payroll

Japan -- Payroll Skill v1.0 (日本の給与計算)

General reference only. This skill is general tax/accounting reference material for AI-assisted workflows. It has not been reviewed for any specific person's facts, documents, elections, deadlines, residency, filing status, or local procedures. Do not rely on it to file, pay, amend, or take a tax position without review by a qualified professional in the relevant jurisdiction.

Section 1 -- Quick Reference

Section 2 -- Income Tax Withholding (源泉徴収)

Japanese employers withhold income tax monthly using the NTA's published withholding tax tables (源泉徴収税額表 -- monthly table / 月額表). The tables include the 2.1% reconstruction surtax (復興特別所得税, in effect through 31 December 2037).

Withholding Table Categories

The 甲 table uses the employee's number of dependents (扶養親族等の数) to determine the withholding amount from a lookup table, not a formula.

Reference: Individual Income Tax Brackets (Annual)

These are the annual rates applied at year-end adjustment (年末調整) or final return (確定申告). Monthly withholding approximates these progressively.

Plus 2.1% reconstruction surtax on calculated tax. Plus separate resident tax (住民税) at approximately 10% (municipal + prefectural), withheld from June of the following year.

Employment Income Deduction (給与所得控除 -- 2026)

Year-End Adjustment (年末調整)

Employers must perform nenmatsu chōsei in December for all 甲 employees. This reconciles monthly withholding to the actual annual tax liability, accounting for insurance deductions, spouse/dependent deductions, and housing loan credits. The employer refunds or collects the difference in the December (or January) payroll.

Section 3 -- Social Security: Employee Deductions (社会保険 / 労働保険)

Japanese social insurance premiums are split approximately 50/50 between employer and employee (except workers' compensation which is employer-only and child allowance contribution which was employer-only until 2026).

Employee Share of Social Insurance (2026)

Health insurance rates vary by prefecture and insurer. The Tokyo rate shown (9.85% total / 4.925% employee) is illustrative. Each prefecture's Kyōkai Kenpō (協会けんぽ) publishes its own rate.

Standard Monthly Remuneration (標準報酬月額)

Social insurance premiums are based on the SMR, a standardised salary grade (not actual pay). SMR is determined in September each year (算定基届 santei kiso todoke) based on April--June average earnings. Changes mid-year only occur with significant salary changes (随時改定 zuiji kaitei -- ≥2 grade change sustained over 3 months).

Bonus Premiums

Social insurance premiums also apply to bonuses at the same rates, subject to annual caps:

• Health insurance: ¥5,730,000 cumulative annual cap on bonus
• Welfare pension: ¥1,500,000 per single bonus payment

Section 4 -- Social Security: Employer Contributions

Employer Share of Social Insurance (2026)

Total Indicative Employer Cost (2026, Tokyo, Age 40--64)

For employees under 40 (no long-term care): approximately 15.70%.

Section 5 -- Minimum Wage and Overtime

Minimum Wage

Japan has no single national minimum wage. Each prefecture sets its own rate annually (effective October). The national weighted average reached ¥1,121/hour in October 2025.

The government targets ¥1,500/hour by the late 2020s.

Overtime (Labour Standards Act)

36 Agreement (三六協定)

Overtime requires a written labour-management agreement (36 Agreement) filed with the Labour Standards Inspection Office. Limits:

Violations can result in penalties of up to ¥300,000 fine or 6 months imprisonment.

Section 6 -- Mandatory Benefits

Annual Paid Leave (年次有給休暇)

Requires 80% attendance in the preceding year. Employers must ensure employees take at least 5 days per year. Unused leave expires after 2 years.

Maternity Leave (産前産後休業)

• Pre-birth: 6 weeks (14 weeks for multiple pregnancy)
• Post-birth: 8 weeks (mandatory)
• Benefit: approximately 67% of daily wage from health insurance (出産手当金)
• Lump-sum birth allowance: ¥500,000 (出産育児一時金)

Childcare Leave (育児休業)

Up to the child's first birthday (extendable to 2 years if daycare unavailable). Benefit: 67% of wage for first 180 days, then 50%, from employment insurance. Social insurance premiums are exempt during leave.

Sick Leave

No statutory paid sick leave in Japan. Employers typically provide 3--10 days contractually. Health insurance provides injury/sickness allowance (傷病手当金) at 2/3 of daily wage from the 4th day of absence, for up to 18 months.

Retirement Allowance (退職金)

Not legally required but deeply customary. Approximately 80% of large employers and 70% of SMEs offer some form of retirement benefit (lump sum, defined benefit, or defined contribution pension).

Section 7 -- Payslip Requirements

Employers must provide a pay statement (給与明細書 kyūyo meisai-sho) each pay period under the Income Tax Act and Labour Standards Act.

Mandatory Payslip Contents

• Employee name
• Pay period and payment date
• Base salary (基本給)
• All allowances itemised (commuting 通勤手当, overtime 時間外手当, housing 住宅手当, etc.)
• Gross pay
• Deductions itemised:
  • Health insurance premium
  • Long-term care insurance premium (if applicable)
  • Welfare pension premium
  • Employment insurance premium
  • Income tax withholding (所得税)
  • Resident tax (住民税) -- withheld June through May
• Net pay
• Working hours and overtime hours

Resident Tax (住民税)

Resident tax is calculated by the municipality based on prior-year income. The municipality sends the employer a notification in May with monthly withholding amounts for June through the following May (special collection / 特別徴収). This is a flat amount per month, not percentage-based.

Section 8 -- Filing Obligations

Monthly Withholding Tax Payment

Payment via bank transfer or e-Tax (国税電子申告 e-Tax).

Year-End Adjustment (年末調整)

Social Insurance Reporting

Penalties

Section 9 -- Common Payroll Patterns

Pattern 1 -- Standard Monthly Employee (Tokyo, Age 35)

Monthly salary ¥350,000. No dependents (甲 column, 0 dependents). Commuting allowance ¥15,000/month (non-taxable up to ¥150,000/month).

1. Health insurance: ¥350,000 × 4.925% = ¥17,238
2. Welfare pension: ¥350,000 × 9.15% = ¥32,025
3. Employment insurance: ¥365,000 × 0.50% = ¥1,825 (on total wages incl. commuting)
4. Child-rearing support: ¥350,000 × 0.115% = ¥403
5. Income tax: per monthly table 甲, 0 dependents, ¥350,000 minus social insurance = ~¥8,250
6. Resident tax: per municipality notification (e.g., ¥18,000/month)
7. Net pay: ¥350,000 + ¥15,000 - deductions ≈ ¥287,259

Employer additionally pays: ¥17,238 (health) + ¥32,025 (pension) + ¥1,260 (child allowance) + ¥403 (child-rearing) + ¥3,103 (employment ins.) + ¥1,095 (workers' comp) = ~¥55,124

Pattern 2 -- Bonus Payment (Summer/Winter)

Employee with SMR grade ¥350,000 receives ¥700,000 summer bonus.

1. Health insurance: ¥700,000 × 4.925% = ¥34,475
2. Welfare pension: ¥700,000 × 9.15% = ¥64,050 (under ¥1,500,000 per-bonus cap)
3. Employment insurance: ¥700,000 × 0.50% = ¥3,500
4. Income tax: per bonus withholding table (賞与に対する源泉徴収税額の算出率の表) -- rate based on prior month's social-insurance-deducted salary
5. No resident tax on bonus (already covered by monthly flat amount)

Pattern 3 -- Mid-Year Salary Change (随時改定)

Employee's base salary increases from ¥300,000 to ¥350,000 in April. If the new SMR grade is 2+ grades different from the current grade, the employer files a 月額変更届. New SMR takes effect from July. Social insurance premiums update from the July payroll.

Pattern 4 -- Employee on Childcare Leave

Social insurance premiums (both employee and employer shares) are exempt during childcare leave. Employment insurance premiums are not charged on zero-pay months. The employee receives childcare leave benefits from employment insurance (67% for first 180 days, 50% thereafter).

Section 10 -- Interaction with Other Skills

Disclaimer

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