Japan expat tax: the remittance basis

Japan taxes its long-term residents on everything they earn worldwide, at rates of up to about 56% once local tax is added. But most foreigners don't start there. For your first five years, you're likely to be a "non-permanent resident", and your foreign income is only taxed if it's paid in Japan or you bring it into the country.

This guide covers Japanese personal tax for people moving to or living in Japan in 2026, a tax year that runs with the calendar year.

What's changed: for 2026, the basic deduction rises to ¥620,000 for most incomes between ¥6.55m and ¥23.5m (higher for lower incomes), and the minimum employment income deduction rises to ¥740,000. A new child and child-rearing support contribution is added to health insurance from April 2026, while the employee's share of employment insurance falls to 0.5%. From 1 January 2027, the 2.1% reconstruction surtax drops to 1.1% and a new 1% defence surtax is added, so the total stays the same. A flat 20% tax on crypto gains made through registered exchanges became law in March 2026, but it has no start date yet, so 2026 gains are still taxed at your full rates.

📋 Japan tax at a glance for 2026

Non-permanent residents and the remittance basis

Does Japan tax foreign income for newcomers? Often not, thanks to non-permanent resident status. It's automatic and lasts up to five years.

Image 1 — non-permanent residents pay tax on foreign income only if it comes in

You're a non-permanent resident if you're tax resident in Japan, you're not a Japanese national, and you've had a home or residence in Japan for five years or less in total in the last ten years. Japanese nationals can never have this status.

As a non-permanent resident, you're taxed on:

• all your Japanese income, including your salary for work done in Japan, wherever it's paid

• foreign income that's paid in Japan

• foreign income paid abroad that you remit to Japan

Foreign income paid abroad that stays abroad, such as rent from your old home, isn't taxed.

There are two catches. First, money you bring into Japan is matched against income first. Any Japanese income paid abroad counts first, then that year's foreign income, and only then savings. So a transfer to fund your life in Tokyo can make foreign income taxable. Second, gains on foreign shares and funds are only protected if you held them before your time as a non-permanent resident and sell them abroad. Securities you buy while you're a non-permanent resident are taxed on the gain, wherever you sell them.

Once you pass five years in the last ten, including earlier postings, you're taxed on your worldwide income.

👉 National Tax Agency: taxpayers and the scope of taxable income (non-permanent residents)

👉 Income Tax Act Enforcement Order, article 17: remittances and foreign securities (in Japanese)

When you become tax resident in Japan

Japan doesn't use a 183-day test. You're resident if you have a domicile in Japan, meaning the centre of your life is there, or if you've had a residence in Japan for a year or more without a break.

If you move for a job that normally needs you to live in Japan for a year or more, you're presumed to have a domicile from the day you arrive. So most people on a work visa are resident from day one.

Leaving works the same way in reverse. If you move abroad for a job expected to last a year or more, you're presumed to have no domicile in Japan. Before you go, you either appoint a tax agent who lives in Japan or file a return and pay your tax before you leave.

Watch the date. Inhabitant tax is charged on everyone with an address in Japan on 1 January, based on the previous year's income. Leave on 2 January and you still owe a full year of it. Your first year in Japan carries none, and the bill arrives the year after.

👉 National Tax Agency: income tax for people leaving Japan

👉 Ministry of Internal Affairs and Communications: individual inhabitant tax (in Japanese)

Income tax rates for 2026

National income tax is progressive, with a 2.1% reconstruction surtax on the tax itself. Then there's a flat 10% inhabitant tax for your prefecture and city.

Japan national income tax rates for 2026

Source: National Tax Agency. Add 2.1% of the tax for the reconstruction surtax (1.1% plus a 1% defence surtax from 2027), and 10% inhabitant tax on your income for the following year.

Employees get a fixed employment income deduction instead of expenses, capped at ¥1.95m on salaries over ¥8.5m. The basic deduction is ¥620,000 for 2026 at most income levels and tapers to nil between ¥23.5m and ¥25m.

👉 National Tax Agency: income tax rates (in Japanese)

Worked example

• You're single, under 40, and earn ¥15.8m (about US$100k) as an employee in Tokyo in 2026.

• Your social insurance is about ¥1.6m: pension ¥713,700 (capped), health insurance about ¥804,000 and employment insurance ¥79,000. It's all deductible.

• After the ¥1.95m employment income deduction and the ¥620,000 basic deduction, your taxable income is ¥11,632,000. National income tax is ¥2,302,560, or ¥2,350,914 with the surtax.

• Inhabitant tax on the same income is about ¥1,187,000, billed the following year.

Your all-in bill is about ¥5.14m, or 32.5% of your salary (about 22% before social insurance). Non-permanent resident status makes no difference, because the salary is for work done in Japan.

Freelancing in Japan

Self-employed profit is business income, taxed on the same scale as a salary. If you keep double-entry books and file through e-Tax, a blue return lets you deduct a further ¥650,000.

Many businesses also pay individual enterprise tax, a local tax of 5% for most professional services, including consulting and design, on profit above ¥2.9m. Then you pay your own social insurance:

• National Pension: a flat ¥17,920 a month in the 2026 fiscal year

• National Health Insurance: set by your city. In Shinjuku, Tokyo, it's capped at ¥960,000 a year for someone under 40, or ¥1.13m between 40 and 64

On US$100k of profit, that comes to about 35% all-in, or about 37% with enterprise tax.

👉 National Tax Agency: blue return special deduction (in Japanese)

👉 Tokyo Metropolitan Government: individual enterprise tax (in Japanese)

Crypto, investments and pensions

How is crypto taxed in Japan? Gains are normally miscellaneous income, added to your other income and taxed at your full rates. With inhabitant tax, that's up to about 56%.

Selling for yen, swapping one crypto for another and paying with crypto are all taxable, and crypto losses can't be set against your salary or other income.

A flat 20% on gains from registered crypto assets sold through a licensed exchange, with a three-year loss carry-forward, became law on 31 March 2026. It starts on 1 January of the year after the new crypto rules in the amended Financial Instruments and Exchange Act take effect. That Act passed in July 2026, but the date for its crypto rules had not been set by October 2026, so the 20% rate does not apply yet.

Dividends, interest and gains on listed shares, funds and bonds are taxed at 20.315%: 15% income tax, the surtax and 5% inhabitant tax.

Foreign state pensions count as public pensions in Japan. They're taxed at the normal rates after a pension deduction. Government service pensions may be taxed only by the paying country under a treaty.

Japan has no wealth tax. It does have two taxes to plan for:

• Exit tax: if you leave with ¥100m or more in shares, funds and similar assets, and you've lived in Japan for more than five of the last ten years, unrealised gains are taxed when you leave. You can defer the tax for five years, or up to ten, with a tax agent and security.

• Inheritance tax: 10% to 55%. Foreign nationals living in Japan on a work or similar visa (not permanent residence or a spouse visa), for 10 years or less of the last 15, are generally taxed only on assets in Japan.

👉 National Tax Agency: tax treatment of crypto assets, December 2025 (in Japanese)

👉 National Tax Agency: 2026 changes to tax on share and crypto sales, including the 20% crypto rate (in Japanese)

👉 National Tax Agency: tax on gains from shares (in Japanese)

👉 National Tax Agency: exit tax on departure (in Japanese)

👉 National Tax Agency: who pays inheritance tax (in Japanese)

Social insurance

Employees join the employees' pension and health insurance through their employer. Many employers use the Japan Health Insurance Association for health insurance. In Tokyo for 2026, you pay:

• Pension: 9.15% (half of 18.3%) on pay up to ¥650,000 a month

• Health insurance: 4.925% (half of 9.85%) on pay up to ¥1.39m a month, plus 0.81% more from age 40 for long-term care

• Child and child-rearing support: 0.115% from April 2026

• Employment insurance: 0.5% of pay from April 2026

Japan has social security agreements with 24 countries, including the UK, the United States, Germany, France, Canada and Australia (those with the UK, South Korea, China and Italy don't combine pension years). If you leave with a short record, you can claim a lump-sum withdrawal payment within two years.

👉 Japan Health Insurance Association: Tokyo contribution table from March 2026 (in Japanese)

👉 Ministry of Health, Labour and Welfare: employment insurance rates for 2026 (in Japanese)

👉 Japan Pension Service: National Pension premium for 2026 (in Japanese)

👉 Shinjuku City: National Health Insurance rates and caps for 2026 (in Japanese)

👉 Japan Pension Service: social security agreements in force

👉 Japan Pension Service: lump-sum withdrawal payments

Double tax treaties

Does Japan have double tax treaties? Yes. Japan has 78 tax treaties covering 81 countries and regions (157 counting information exchange and multilateral agreements). Partners include the UK, the United States, Australia, Singapore, Hong Kong, Germany, France, the Netherlands, Canada, India, China and the UAE.

If a treaty makes you resident in both countries, its tie-breaker looks at your permanent home first, then your centre of vital interests, your habitual abode and your nationality.

👉 Ministry of Finance: list of Japan's tax conventions

The digital nomad visa

Since 2024, Japan has offered a digital nomad visa, a "designated activities" status for remote workers. You need an annual income of ¥10m or more (about US$63,000), private medical insurance with at least ¥10m of medical cover, and a passport from one of the eligible countries and regions listed by the Immigration Services Agency.

You can stay for six months, with no extension, and come back on the same status after six months outside Japan. You don't get a residence card, you can't work for Japanese companies or clients, and your spouse and children can come with you.

A six-month stay without a home in Japan normally keeps you non-resident. Pay for work done in Japan is still Japanese income, but a tax treaty can exempt it if you meet the treaty's conditions, usually 183 days or less.

👉 Ministry of Foreign Affairs: digital nomad visa requirements

👉 Immigration Services Agency: digital nomad questions and answers

Who is Japan good for?

How does Japan compare? Ratings are relative to the 150+ countries TaxPilot covers, using 2026 rules, the all-in cost including social insurance, and ¥158 to the US dollar. They assume ordinary resident status, because non-permanent resident status lasts five years at most.

☑️ Who is Japan good for? Tax ratings for expats in 2026

Filing and deadlines

Most employees don't file, because the employer settles the tax through the year-end adjustment. You must file if your salary is over ¥20m, or you have more than ¥200,000 of other income, which includes foreign income you've remitted as a non-permanent resident.

The return for 2026 is filed between 16 February and 15 March 2027. Your city then works out your inhabitant tax from the return. Self-employed people may also have to make prepayments of income tax during the year.

👉 National Tax Agency: the final tax return

👉 National Tax Agency: employees who must file a return

Frequently asked questions

What is a non-permanent resident in Japan?

It's a tax status, not a visa. You're a non-permanent resident if you're tax resident in Japan, not a Japanese national, and have lived in Japan for five years or less in total in the last ten years. Your foreign income is only taxed if it's paid in Japan or you bring it in.

Does Japan tax foreign income?

Yes, for most residents. Non-permanent residents are the exception: foreign income paid abroad is only taxed if it's remitted to Japan, and money you bring in counts as that year's income before savings.

What are the income tax rates in Japan in 2026?

National income tax runs from 5% to 45% above ¥40m, plus a 2.1% surtax on the tax and a 10% inhabitant tax. The top combined rate is about 56%.

How is crypto taxed in Japan?

Crypto gains are miscellaneous income, taxed at your full income tax and inhabitant tax rates, and losses can't be set against other income. A flat 20% rate on registered crypto assets sold through a licensed exchange is now law, but it only starts once the new crypto rules in the Financial Instruments and Exchange Act take effect, and that date has not been set yet.

Does Japan have a digital nomad visa?

Yes. Remote workers from eligible countries earning ¥10m a year or more, with private medical insurance, can stay for up to six months. It can't be extended.

Does Japan have an exit tax?

Yes. If you leave with ¥100m or more in shares, funds and similar assets, and have lived in Japan for more than five of the last ten years, unrealised gains are taxed when you leave. The tax can be deferred for five to ten years.