Tax system in Japan
Japan generally taxes permanent residents on worldwide income. A non-permanent resident is a non-Japanese resident with a domicile or residence in Japan for five years or less during the preceding ten years; foreign-source income can be outside Japanese tax when it is neither paid in Japan nor remitted to Japan, subject to the detailed rules.
Personal income tax is progressive from 5% to 45% on taxable income. The 2.1% Special Income Tax for Reconstruction is added to income tax through 2037, while the standard income-based inhabitant tax is 10% split between prefectural and municipal taxes.
Japanese companies generally pay 23.2% national corporation tax, together with local corporate inhabitant tax, enterprise tax and other corporate levies. For fiscal years beginning on or after April 1, 2026, the Defense Special Corporate Tax adds 4% to the standard corporate-tax amount above its ¥5 million basic deduction.
Japan has no broad annual personal net-wealth tax. Property owners can still face fixed asset tax, city planning tax, real-estate acquisition tax, registration and license tax, stamp tax, and substantial inheritance or gift tax.
Consumption tax is 10% for most taxable goods and services and 8% for qualifying food, beverages excluding alcohol and eating-out services, and subscribed newspapers. Employers and workers must also model health insurance, employees' pension, employment insurance and other payroll costs.
Tax rates at a glance
- National income tax
- 5% - 45%Progressive
- Special reconstruction surtax
- 2.1% of income tax
- Inhabitant tax
- About 10%
- Listed securities gains
- 20.315%
- Corporate tax
- 23.2%
- Inheritance tax
- 10% - 55%
- Consumption tax
- 10% / 8%
Who benefits most
These profiles tend to benefit most when the rules match their real residence, payroll and business setup.
EmployeesFoundersInvestorsProperty ownersCross-border families
Watch out for
- Japan's residence categories are not the same as immigration status. A visa or residence card does not by itself determine whether worldwide income, remitted foreign income or Japanese-source income is taxable.
- Inhabitant tax is generally based on the prior year's income and the taxpayer's status on January 1. A person leaving Japan can therefore still have a current-year local-tax bill after departure.
- The 23.2% corporate figure is only the national headline rate. Local taxes, per-capita levies, enterprise tax, payroll, consumption tax compliance and the 2026 defense surcharge can materially change the company cost.
- Crypto gains are generally miscellaneous income rather than a simple 20.315% capital-gains item. Trading frequency, business status, exchanges, valuation and foreign reporting can change the analysis.
- Japan's inheritance and gift rules can reach foreign assets in cross-border cases. Nationality, residence history, temporary-resident status, the donor or decedent, and the location of the property all matter.
Frequently asked questions
Is Japan a high-tax country?
Generally yes. Japan combines progressive national income tax, a 10% standard inhabitant-tax layer, payroll social insurance, 10% consumption tax, corporate taxes, property taxes and inheritance or gift tax.
What is the top income-tax rate in Japan?
The top national individual income-tax rate is 45% on taxable income of ¥40 million or more. The 2.1% reconstruction surtax applies to the income-tax amount, and inhabitant tax is a separate local layer.
Does Japan have a wealth tax?
Japan does not currently levy a broad annual personal net-wealth tax on financial assets. Real estate can still attract fixed asset tax and city planning tax, while investment income, transfers, inheritance and gifts are taxed under separate rules.