RetireJapan

Hi all. I recently helped my partner understand her end of year tax form, specifically how the amount of income tax was calculated. I put together this guide so we don't have to go through the same thing next year. Posting here in case it's useful for anyone. Note the numbers are for 2020 - they were different in 2019 and back. The tables won't paste very well but I think you can get the idea.


UNDERSTANDING YOUR END OF YEAR TAX SLIP

Salary income withholding slip / Kyūyo shotoku no genzenchōshū-hyō / 給与所得の源泉徴収票



1. Total income before tax / Shiharai kingaku / 支払金額


2. Make an adjustment using the following table (2020 amounts).

(Total income before tax) - (Adjustment amount) = (Income after adjustment)

Income after adjustment / Kyūyo shotoku kōjo-go no kingaku (chōsei kōjo-go) / 給与所得控除後の金額（調整控除後）

TOTAL INCOME BEFORE TAX ### ADJUSTMENT AMOUNT
0 - 1,625,000 ########## 550,000
1,625,001 - 1,800,000 ### (Total income) x 40% - 100,000
1,800,001 - 3,600,000 ### (Total income) x 30% + 80,000
3,600,001 - 6,600,000 ### (Total income) x 20% + 440,000
6,600,000 - 8,500,000 ### (Total income) x 10% + 1,100,000
8,500,001 + ########## 1,950,000


3. Calculate the total amount of deductions.

(Total amount of deductions) = (Social insurance premiums) + (Life insurance premiums) + (Earthquake insurance) + (Housing loan) + (480,000 Basic deduction)

Total amount of deductions / Shotoku kōjo no gaku no gōkei-gaku / 所得控除の額の合計額

Social insurance premiums / Shakai hokenryōtō no kingaku / 社会保険料等の金額. This includes pension payments and health insurance payments.

Life insurance premiums / Seimei hoken-ryō no kōjo-gaku / 生命保険料の控除額

Earthquake insurance / Jishin hoken-ryō no kōjo-gaku / 地震保険料の控除額

Housing loan / Jūtakukariirekintōtokubetsukōjo no gaku / 住宅借入金等特別控除の額

Basic deduction / Kiso kōjo / 基礎控除. For 2020, this is 480,000 for everyone.



4. Calculate your taxable income amount. This amount isn’t shown on your end of year form.

(Income after adjustment) - (Total amount of deductions) = (Taxable income)



5. Calculate the income tax amount in three steps using the following table (2020 amounts).

Step A: (Taxable income) x (tax rate) - (amount from table) = (Amount A)
Step B: (Amount A) x 1.021 = (Amount B)
Step C: Round (Amount B) down to the nearest 100 yen = (Amount C)

Amount C is your income tax amount.

Income tax amount / Genzenchōshū zeigaku / 源泉徴収税額

TAXABLE INCOME ### INCOME TAX CALCULATION
0 - 1,950,000 ########## (Taxable income) x 5% - 0
1,950,001 - 3,330,000 ##### (Taxable income) x 10% - 97,500
3,330,001 - 6,950,000 ##### (Taxable income) x 20% - 427,500
6,950,001 - 9,000,000 ##### (Taxable income) x 23% - 636,000
9,000,001 - 18,000,000 #### (Taxable income) x 33% - 1,536,000
18,000,001 - 40,000,000 #### (Taxable amount) x 40% - 2,796,000
40,000,001 + ########## (Taxable amount) x 45% - 4,796,000

There is a new deduction from this year called 所得金額調整控除 that amounts 15万円 (on my 源泉徴収 it is on the right side, before your list up dependants). It compensates for the lower ADJUSTMENT AMOUNT compared to until last year. This deduction only applies, if you learn less that 850 万円、or if you earn more and have a dependant (children, people with disability etc). So for example if you are single and earn 1000 万円 before adjustment, you can not apply it (see also viewtopic.php?f=8&t=1132)