United States vs Japan taxes

Japan and the United States both hide a second tax layer under the national table. In Japan that layer is inhabitant tax and reconstruction surtax. In the United States it is the state.

National Japanese income tax is progressive from 5% to 45%. That is not the take-home rate. The Special Income Tax for Reconstruction adds 2.1% of the income-tax amount through 2037. Standard income-based inhabitant tax is about 10%, split between prefectural and municipal charges. A high earner who only models the 45% national band will understate the Japanese bill in the same way a Californian understates the U.S. bill by quoting 37% federal.

The United States taxes citizens and resident aliens on worldwide income. Federal ordinary rates run from 10% to 37%. There is no federal VAT. State income, sales and property taxes then redraw the map. A move from Texas to Tokyo is a different exercise from a move from New York to Tokyo, because one person is adding Japanese local tax on top of a zero-state-income-tax baseline and the other is swapping one local stack for another.

Listed investments are Japan's more competitive corner. Many listed-share gains and dividends are taxed at 20.315%. That can look similar to a U.S. federal long-term gain plus 3.8% NIIT, and it can look better than a U.S. short-term gain taxed as ordinary income. Inheritance is the opposite story. Japan uses a 10% to 55% estate-tax scale after a basic exemption. The U.S. federal estate tax can reach 40%, but the exemption is large, so the practical U.S. result for many families is still lighter.

Corporate tax follows the same pattern of headline plus local extras. Japan's national corporation tax is 23.2%, with local corporate inhabitant tax, enterprise tax and, for fiscal years beginning on or after 1 April 2026, a defense special corporate tax of 4% of the standard corporate-tax amount above a ¥5 million basic deduction. A U.S. C corporation pays 21% federally before state tax. Consumption tax is 10% standard and 8% reduced.

Residence status inside Japan matters. A non-permanent resident who is not a Japanese national and has been in Japan for five years or less in the preceding ten years can keep some foreign-source income outside Japanese tax if it is neither paid nor remitted in Japan. That is a Japanese rule, not a U.S. exit. A U.S. citizen still has to reconcile IRS worldwide reporting with Japanese inhabitant tax, social insurance and the treaty.