In Japan, bonuses are special payments separate from your regular monthly salary. Many companies pay bonuses twice a year, in summer and winter, but the frequency can vary. Some companies pay bonuses once or three times a year, while others don’t have a bonus system at all.
In this post, we’ll break down how bonuses work in Japan, including payment timing, average amounts, and deductions like taxes and social insurance.
Bonus Payment Timing and Frequency
The timing and frequency of bonus payments depend on each company’s work rules or employment contracts, as there are no legal requirements. Generally, bonuses are paid twice a year, in summer and winter. Some companies also pay a fiscal year-end bonus, depending on their financial performance.
Since many Japanese companies end their fiscal year in March, year-end bonuses are typically paid between March and April.
Bonus Eligibility
Each company sets its own criteria for paying bonuses, and there’s no legal issue if bonuses aren’t provided. However, companies that offer bonuses must clearly state the details in their work rules, as required by Japanese labor law. Common conditions for receiving a bonus include:
- Being employed during the evaluation period.
- Being an active employee on the payment date.
Bonus Amounts
According to a government survey, the average summer bonus in 2022 was ¥389,331, and the average winter bonus was ¥392,975.
The bonus amount varies by company and is often calculated based on your basic salary. For example, a typical bonus might be expressed as “basic salary × months.” Basic salary excludes allowances like commuting or overtime pay and serves as the base amount before deductions. On average, each bonus payment equals about 1–2 months of basic salary.
Taxes and Social Insurance Deductions
Just like your regular salary, bonuses are also subject to deductions for social insurance premiums and income tax.
The income tax deducted from bonuses varies depending on factors such as the bonus amount and the number of dependents. Social insurance premiums are calculated based on the “standard bonus amount,” which is the bonus amount rounded down to the nearest 1,000 yen.
Here’s an overview of the deductions and how they’re calculated:
| Deduction | Calculation Method | Notes |
| Pension Premium | Standard bonus amount × 18.3% ÷ 2 | Split evenly between the company and employee. |
| Health Insurance | Standard bonus amount × health insurance rate ÷ 2 | Rates vary by prefecture and type of insurance. Also split evenly between the company and employee. |
| Unemployment Insurance | Bonus amount × unemployment insurance rate | Based on the full bonus amount (not the rounded standard bonus amount). Rates vary by industry. |
| Long-term Care Insurance | Standard bonus amount × long-term care rate ÷ 2 | Applies to employees aged 40–64. Split evenly between the company and employee. |
| Income Tax | 1. Calculate the amount after deducting social insurance premiums from the previous month’s salary. 2. Refer to the “Withholding Tax Table for Bonuses” issued by the National Tax Agency to find the applicable tax rate based on the number of dependents and the amount from step 1. 3. Multiply the bonus amount (after deducting social insurance premiums) by the tax rate determined in step 2. | The “Withholding Tax Table for Bonuses” issued by the National Tax Agency is revised annually. |
Summary
The rules for bonus payments—timing, frequency, and calculation—vary by company. Not all companies provide bonuses, and the deductions for taxes and social insurance can significantly reduce the take-home amount.
For foreign workers in Japan, bonuses may be paid if you meet the company’s conditions. Make sure to review your work rules or contract for details, and don’t hesitate to ask your company for clarification if needed!
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