This article contains affiliate links and PR content. If you purchase through these links, I may earn a small commission at no extra cost to you. Thank you for supporting my site!
When you work in Japan, various deductions for social insurance and taxes are taken from your monthly salary.
This article explains in simple terms what kinds of deductions you can expect when working for a Japanese company.
Health Insurance Premium
What is Health Insurance?
This insurance helps reduce your medical costs when you visit a hospital due to illness or injury.
You may also receive benefits such as Sickness and Injury Allowance when you take medical leave, or a Childbirth and Childcare Lump-sum Grant when you have a baby.
Who needs to enroll?
Not only full-time employees but also part-time and temporary workers must enroll if:
- Their working hours or working days are at least 3/4 of a regular employee.
How is the premium calculated?
The cost is shared equally between you and your employer.
Health Insurance Premium = Standard Monthly Remuneration × Insurance Rate ÷ 2
Standard Monthly Remuneration:
This is a pre-set amount based on your average monthly salary, including commuting allowance and overtime pay.
Insurance Rate:
Varies by prefecture. For fiscal year 2025 (Reiwa 7), the national average is 10.00%, and for Tokyo, it has been reduced from 9.98% (FY2024) to 9.91%.
Example (Tokyo, monthly salary: 300,000 yen):
Health Insurance Premium = 300,000 × 9.91% ÷ 2 ≈ 14,865 yen
Nursing Care Insurance Premium
What is Nursing Care Insurance?
This insurance supports future long-term care needs for people aged 40 and above.
Who pays?
- Ages 40–64: Premium is deducted from salary (Category 2 insured persons).
- Age 65 and above: Premium is paid directly to your local municipality (Category 1 insured persons).
How is the premium calculated?
Also shared equally between you and your employer.
Nursing Care Insurance Premium = Standard Monthly Remuneration × Nursing Care Insurance Rate ÷ 2
For fiscal year 2025 (Reiwa 7):
The national rate has been slightly reduced to 1.59%.
Example (Tokyo, monthly salary: 300,000 yen):
Nursing Care Insurance Premium = 300,000 × 1.59% ÷ 2 ≈ 2,385 yen
Employees’ Pension Insurance
What is Employees’ Pension Insurance?
This is Japan’s public pension system. It provides:
- Old-age Pension after retirement
- Disability Pension if you become disabled
- Survivors’ Pension for your family if you pass away
How is the premium calculated?
Also split 50/50 between you and your employer.
Employees’ Pension Premium = Standard Monthly Remuneration × 18.3% ÷ 2
Example (Tokyo, monthly salary: 300,000 yen):
Employees’ Pension Premium = 300,000 × 18.3% ÷ 2 ≈ 27,450 yen
Employment Insurance
What is Employment Insurance?
This insurance supports you when you lose your job or take job training.
Who is covered?
- People working at least 20 hours per week
- Expected to work for at least 31 days
This applies to part-time and temporary workers too.
How is the premium calculated?
Both you and your employer share the cost. (Employers pay a higher portion.)
For fiscal year 2025 (Reiwa 7), General Business sector rate:
- Employee share: 5.5‰ (0.55%)
- Employer share: 9.0‰ (0.9%)
- Total: 14.5‰ (1.45%)
Employment Insurance Premium = Monthly Gross Salary × 5.5‰
Example (monthly gross salary: 300,000 yen):
300,000 × 5.5‰ = Approximately 1,650 yen (employee portion)
Income Tax
What is Income Tax?
This is a national tax based on your annual income.
Your company deducts an estimated amount from your monthly salary and pays it to the tax office on your behalf. This system is called Withholding Tax.
At the end of the year (December), your company conducts year-end adjustment to settle any over- or underpayment.
How is it calculated?
Your company uses the Withholding Tax Table published by the National Tax Agency, based on your salary and the number of dependents.
Resident Tax
What is Resident Tax?
A local tax paid to the municipality where you live as of January 1.
It’s based on your income from the previous calendar year.
Income from January to December is taxed from the following June to May, divided into 12 monthly payments.
How is it collected?
In most cases, companies deduct it monthly from your salary and pay it to your municipality (called Special Collection).
What does your company do?
- January: Reports your salary details to the local government
- May: Receives the tax notification from the local government
- June onwards: Deducts the specified monthly Resident Tax from your salary
Optional: Consider Additional Protection (Life Insurance)
Japan’s social insurance system covers many risks such as medical expenses, disability, and retirement.
However, it may not cover all situations—especially in cases of serious illness, accidents, or providing financial support for your family if something happens to you.
If you want extra protection or peace of mind, many people in Japan choose to get private life insurance in addition to public insurance.
If you’re interested, you can get free advice from professional life insurance consultants.
They can help you find the right plan based on your needs and budget.
For more information (Japanese only):
Summary (Fiscal Year 2025 – Reiwa 7)
When working in Japan, the following will be deducted from your monthly salary:
- Health Insurance Premium (Example: 300,000 × 9.91% ÷ 2 ≈ 14,865 yen)
- Nursing Care Insurance Premium (For age 40+: 300,000 × 1.59% ÷ 2 ≈ 2,385 yen)
- Employees’ Pension Premium (Example: 300,000 × 18.3% ÷ 2 ≈ 27,450 yen)
- Employment Insurance Premium (300,000 × 5.5‰ ≈ 1,650 yen)
- Income Tax (Estimated monthly withholding, adjusted at year-end)
- Resident Tax (Based on last year’s income, deducted monthly)
These deductions are important for your future and in case of emergencies.
Your company calculates and pays them on your behalf, but it’s a good idea to check your payslip and understand where your money is going.
Note: Rates may change yearly. Always check the latest information on the websites of the Japan Health Insurance Association, Ministry of Health, Labour and Welfare, and the National Tax Agency.
Comments