Due to the recent record-high inflation, a special flat-amount cut of personal income tax is being implemented for both income tax and resident tax. This means a flat reduction of 30,000 yen for income tax and 10,000 yen for resident tax, totaling 40,000 yen per person.
This article explains the details, implementation methods, and deduction amounts of this flat-amount tax cut.
Who is Eligible?
You are eligible if you meet all of the following criteria:
- Resident of Japan
- Total income amount is 18,050,000 yen or less
- For those with only salary income, the salary income must be 20,000,000 yen or less
In addition, the flat-amount tax cut applies not only to the taxpayer but also to the taxpayer’s spouse and dependent relatives who live in the same household.
Spouse Living in the Same Household
- Must share the same household budget with the taxpayer
- Must have an address in Japan
- Must have a total annual income of 480,000 yen or less (If only salary income, the salary must be 1,030,000 yen or less)
Dependent Relatives
- Must share the same household budget with the taxpayer
- Must have an address in Japan
- Must have a total annual income of 480,000 yen or less (If only salary income, the salary must be 1,030,000 yen or less)
When and How Will It Be Implemented?
Income Tax
The deduction will be applied to the income tax withheld from your salary or bonus in June 2024. If the deduction cannot be fully applied in June, it will continue to be deducted from July onwards. The tax deduction amount will be clearly stated on your pay slip.
Resident Tax
Usually, the annual resident tax amount is divided evenly over 12 months, from June of the current year to May of the following year, and deducted from your salary. However, for the fiscal year 2024, when the flat-amount tax cut is implemented, the resident tax will not be deducted from your salary in June. Instead, the annual tax amount minus the reduction will be divided evenly over 11 months, from July 2024 to May 2025, and deducted from your salary.
Example of Tax Reduction Calculation
For a family of four, including a spouse and two dependent relatives:
Income Tax Calculation
30,000 yen (for the individual) + 30,000 yen × 3 (for the spouse and two dependents) = Total 120,000 yen
Resident Tax Calculation
10,000 yen (for the individual) + 10,000 yen × 3 (for the spouse and two dependents) = Total 40,000 yen
If the Reduction Exceeds the Tax Amount
If your tax amount is less than 40,000 yen, or if the reduction amount exceeds your tax liability, the remaining amount will be rounded up to the nearest 10,000 yen and paid to you as a subsidy (adjustment payment). The timing of the payment varies by municipality. For more details, please check the website of your local municipality.
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