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Individual Income Tax withheld from monthly salary

Monthly salary

The income tax amount withheld from monthly salary and bonus is calculated according to the withholding tax amount table issued by National Tax Agency. The withholding tax amount table has 3 kinds of categories; Kou-ran, Otsu-ran, Hei-ran.

 

Category Who Comment
1 Koh-ran Those who submit “application for exemption for dependents” Most employment income earners belong to “Koh-ran”
2 Otsu-ran Those who do NOT submit “application for exemption for dependents” 1.     Any employees who get salary from 2 or more companies, and who submit “application for exemption for dependents” to the other (principal) company, belong to this category.

2.     The tax rate is higher than in case of “Koh-ran”.

Those who submit “application for exemption for dependents” to the other company
3 Hei-ran Daily labor and part-time job workers for short term Daily tax amount table used for daily wage

Year-end adjustment

Employment income earners whose revenue from salaries is below JPY20,000,000
According to “Application for exemption for dependents” and “Application for deduction for insurance premiums” submitted by employees, the employer (company) calculate the tax amount to be paid for total salary as of the last salary payment date for the relevant year.
The difference between:

  1. the above tax amount to be paid for total salary
  2. the accumulated income tax withheld from each payment of monthly salary and bonus is withheld from (or refunded to) the last salary of the year, and will be paid by the company to the tax office.

This procedure is called as “Year-end adjustment”.

Employees whose tax amount to be paid for total salary is determined in the Year-end adjustment, do not need to file a final tax return, if they have no other income except employment income.

Employment income earners who receive salary in the amount of JPY20,000,000 or more
Their tax amount to be paid for total salary is not determined in the Year-end adjustment. They need to file a final tax return.

HP of National Tax Agency

Withholding Tax Guide

https://www.nta.go.jp/shiraberu/ippanjoho/pamph/gensen/shikata2017/pdf/withholdingtaxguide2017.pdf

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