Japan Income Tax Rates 2026: Individual Tax, Capital Gains and Corporate Tax
Japan taxes individuals according to their tax residence, the source and category of income, and applicable deductions. This guide explains the national income tax brackets, salary deductions, taxation of nonresidents, real estate capital gains and corporate tax rates.
Important: The page retains its original 2017-2018 URL for continuity, but the article discusses 2026 rules. National income tax, local inhabitant tax and the special reconstruction income tax are distinct charges. The final liability depends on individual circumstances and the tax year.
1. Japan individual income tax rates for 2026
Under Japan's Income Tax Act, ordinary taxable income is generally subject to progressive national income tax rates from 5% to 45%. The following brackets apply to taxable income after applicable income deductions; they are not gross salary bands. The quick deduction is subtracted after multiplying taxable income by the bracket rate.
| Annual taxable income (JPY) | National rate | Quick deduction (JPY) |
|---|---|---|
| 1,000 - 1,949,000 | 5% | 0 |
| 1,950,000 - 3,299,000 | 10% | 97,500 |
| 3,300,000 - 6,949,000 | 20% | 427,500 |
| 6,950,000 - 8,999,000 | 23% | 636,000 |
| 9,000,000 - 17,999,000 | 33% | 1,536,000 |
| 18,000,000 - 39,999,000 | 40% | 2,796,000 |
| 40,000,000 and above | 45% | 4,796,000 |
Example: For JPY 5,000,000 of taxable ordinary income, national income tax before tax credits and reconstruction surtax is JPY 5,000,000 × 20% - JPY 427,500 = JPY 572,500. Taxable income is generally rounded down to the nearest JPY 1,000 for this calculation.
Official reference: National Tax Agency (NTA), Tax Answer No. 2260 - Income tax rates.
2. Employment income deduction and personal deductions
Employees generally deduct a statutory employment income deduction from gross salary to determine employment income. This is different from the basic exemption and other personal deductions. For 2026 income, the NTA's published salary deduction schedule includes the following general amounts, subject to statutory rounding and special calculation tables.
| Gross annual employment receipts (JPY) | Employment income deduction |
|---|---|
| Up to 2,200,000 | 740,000 (subject to the statutory computation) |
| 2,200,001 - 3,600,000 | 30% of receipts + 80,000 |
| 3,600,001 - 6,600,000 | 20% of receipts + 440,000 |
| 6,600,001 - 8,500,000 | 10% of receipts + 1,100,000 |
| 8,500,001 and above | 1,950,000 maximum |
For low earnings, the deduction cannot exceed actual qualifying salary receipts. Certain employee income adjustments and additional deductions may apply. Basic exemption amounts and eligibility vary with income and applicable reform rules; they should be checked for the relevant tax year.
Official reference: NTA Tax Answer No. 1410 - Employment income deduction.
3. Residents, non-permanent residents and nonresidents
Residents
An individual generally qualifies as a Japanese tax resident if the person has a domicile in Japan or has maintained a residence there continuously for at least one year. Residents other than non-permanent residents are generally taxable on worldwide income, subject to applicable relief and tax treaties.
Non-permanent residents
A non-Japanese national who is a resident and has had a domicile or residence in Japan for no more than five years in the preceding ten years may qualify as a non-permanent resident. Foreign-source income can receive different treatment depending on whether it is paid in Japan or remitted to Japan. Salary attributable to work performed in Japan is ordinarily Japan-source income even if paid abroad.
Nonresidents
Persons who are not Japanese tax residents are generally taxed on Japan-source income, with the applicable withholding or filing treatment depending on the type of income, any permanent establishment and an applicable tax treaty. A common withholding rate on certain nonresident payments is 20.42%, but it is not a universal rate.
Official information: NTA individual income tax guidance in English.
4. Withholding tax in Japan
Japanese withholding rules can apply to employment salary, bonuses, retirement allowances, certain professional fees, interest and dividends. Employers generally withhold income tax from wages and perform year-end adjustments when eligible. For corporations, interest and dividends may also be subject to withholding, depending on the recipient and the income category. Treaty relief and statutory exemptions may change the outcome.
5. Capital gains tax on Japanese real estate
Capital gains from land and buildings are generally taxed separately from ordinary income. For this purpose, ownership is tested as of January 1 of the year of sale, rather than simply counting years to the sale date. The basic rates below apply before any special exemptions or preferential treatment.
| Ownership period on January 1 of sale year | National income tax | Local inhabitant tax | Reconstruction surtax on national tax | Combined standard rate |
|---|---|---|---|---|
| 5 years or less (short term) | 30% | 9% | 2.1% of national income tax | 39.63% |
| More than 5 years (long term) | 15% | 5% | 2.1% of national income tax | 20.315% |
The reconstruction surtax is 2.1% of the national income tax amount, not an additional 2.1 percentage points on the gain. Eligible principal residences and qualifying transfers may receive special deductions or reduced rates. Nonresident sellers may face withholding obligations on the sale proceeds, subject to exceptions and later settlement.
Official references: NTA No. 1440 - Gains from land and buildings and NTA No. 3211 - Short-term property gains.
6. Japan corporate income tax rates in 2026
Japanese companies may be subject to national corporate tax, local corporate tax, corporate inhabitant tax, enterprise tax and special corporate enterprise tax. A company's effective burden depends on its size, taxable income, location and fiscal-year commencement. The following JETRO standard-rate examples are illustrative effective rates, not a single national corporate tax rate.
| Fiscal year beginning | SME: income up to JPY 4m | SME: over JPY 4m to JPY 8m | SME: over JPY 8m | Other enterprises |
|---|---|---|---|---|
| Apr 1, 2021 - Mar 31, 2026 | 21.37% | 23.17% | 33.58% | 29.74% |
| On or after Apr 1, 2026 | 21.94% | 23.73% | 34.43% | 30.64% |
For qualifying small and medium-sized companies, the national corporate tax rate is generally 15% on the first JPY 8 million of taxable income under applicable reduced-rate provisions, and 23.2% on income above that threshold, subject to qualifications and exceptions. Eligibility commonly involves paid-in capital of JPY 100 million or less and other conditions; ownership by large companies and additional statutory restrictions can disqualify an entity. Local taxes and enterprise taxes are additional.
Official reference: JETRO - Overview of corporate income taxes in Japan.
7. Filing, local taxes and practical considerations
- Tax year: Individual income tax generally follows the calendar year; corporate fiscal years depend on the entity.
- Local inhabitant tax: Individuals generally pay local inhabitant tax in addition to national income tax, with the precise computation depending on municipality and applicable deductions.
- Reconstruction special income tax: Generally 2.1% of the calculated national income tax through 2037 under the relevant legislation.
- Tax treaties: Double taxation agreements may affect residence, withholding and foreign tax credits.
- Returns: Individual returns are ordinarily due during the annual filing period in the following year, with specific exceptions and extensions.
8. Official legal references and further reading
The primary framework includes Japan's Income Tax Act, Special Taxation Measures Act, Corporation Tax Act, local tax legislation and reconstruction surtax legislation. Their detailed application is reflected in the NTA guidance linked above. For authoritative English-language business information, consult JETRO's Taxes in Japan guide; for Japanese tax administration and forms, consult the National Tax Agency.
Last reviewed: October 23, 2026. This is general tax information, not a calculation of an individual's or company's liability. Confirm changes, effective dates and treaty positions before filing.