Year-End Tax Adjustment Guide for Foreigners in Japan【2026】Complete Your Income Tax as a Company Employee
📋 Contents
Foreign company employees working in Japan are subject to year-end tax adjustment (年末調整 – nenmatsu chōsei) just like their Japanese colleagues. This is the process by which your employer recalculates your correct income tax for the full year — based on your actual annual income and applicable deductions — and settles the difference against the tax provisionally withheld from your monthly salary (源泉徴収 – withholding tax). In most cases you will receive a refund, but additional tax may be collected if, for example, your number of dependants decreased or your salary rose significantly during the year. This guide covers year-end adjustment basics through the special points that apply to foreign residents (overseas dependants, procedures when leaving Japan).
① What is year-end tax adjustment? (Relationship with withholding tax · Difference from final tax return)
Relationship between withholding tax and year-end adjustment
Each month when your salary is paid, your employer withholds an estimated amount of income tax calculated according to the NTA's "Withholding Tax Table" (源泉徴収税額表). However, this monthly calculation is only an approximation and will almost never match the precise income tax owed over the full year.
At year-end, your employer recalculates the precise tax amount based on the year's actual income, deductions, and applicable credits, then settles the difference between the tax already withheld and the actual tax owed. This is year-end tax adjustment. If too much was withheld, the excess is "refunded"; if too little was withheld, the shortfall is "collected".
Difference from final tax return (確定申告)
| Item | Year-end adjustment | Final tax return (確定申告) |
|---|---|---|
| Who files | Your employer files on your behalf | You file at the tax office in person |
| Who must use it | Salaried employees (company employees, etc.) | All taxpayers |
| Filing period | Nov–Dec each year (document submission); settled through December salary | Feb 16 – Mar 15 of the following year |
| Medical expense deduction | Not available | Available |
| Home loan deduction (first year) | Not available | Available |
| Furusato Nozei (outside one-stop scheme) | Not available | Available |
| Crypto / side-income | Not available | Available |
Deductions that cannot be processed through year-end adjustment (such as medical expense deductions) or income outside of salary require a separate final tax return (→Tax Filing & Resident Tax Guide).
② Who is — and is not — covered
Who is covered by year-end adjustment
Year-end adjustment generally applies to salaried employees who have submitted the "Withholding Exemption Certificate for Dependants" (給与所得者の扶養控除等申告書) to their employer. Foreign nationals receiving salary from a Japanese company are also covered, regardless of their residence status category.
Cases where year-end adjustment does not apply (final tax return required)
In the following situations, tax cannot be settled through year-end adjustment and you must file a final tax return yourself (key requirements under the Income Tax Act).
- Total salary income for the year exceeds ¥20,000,000
- Receiving salary from two or more employers (salary from the non-primary employer is not covered by year-end adjustment)
- Total income other than salary and retirement income exceeds ¥200,000 per year (side jobs, freelance work, crypto gains, etc.)
- Resigned mid-year and did not start a new job in the same year (year-end adjustment cannot be performed after resignation)
- Wishing to claim deductions not available through year-end adjustment, such as medical expense deductions or Furusato Nozei
③ Year-end adjustment timeline
④ The three declaration forms to submit
The main documents submitted for year-end adjustment are the three types below (additional documents may be needed depending on your situation).
| Form name | Main content | Submitted to |
|---|---|---|
| ① Withholding Exemption Certificate for Dependants (給与所得者の扶養控除等（異動）申告書) | Information on spouse and dependant relatives (including overseas), disability deduction, etc. | Employer (submit each year) |
| ② Insurance Premium Deduction Certificate (給与所得者の保険料控除申告書) | Life insurance premium deduction, earthquake insurance deduction, small-enterprise mutual aid premium deduction (iDeCo, etc.) | Employer |
| ③ Basic Deduction / Spouse Deduction / Income Adjustment Deduction Certificate (給与所得者の基礎控除申告書兼配偶者控除等申告書兼所得金額調整控除申告書) | Estimated total annual income, spouse's income details, application for basic deduction | Employer |
Completing the forms in a foreign language
All declaration forms must be completed in Japanese. Names are generally written in Roman letters (as in your passport), but some employers may request katakana. If you are unsure, ask your employer's HR representative.
⑤ Key deductions available to foreign residents through year-end adjustment
Basic deduction (基礎控除)
A fundamental deduction available to every taxpayer. The amount decreases as total income rises (for the exact maximum and phase-out schedule, see the NTA's guidance for the relevant tax year). It is applied automatically when you submit the "Basic Deduction Declaration".
Spouse deduction and special spouse deduction
Available when a spouse who shares living expenses (whether residing in Japan or overseas, provided conditions are met) has income below a certain threshold. The deduction amount varies with your own income level. Applied via the "Basic Deduction / Spouse Deduction Declaration".
Dependant deduction (domestic relatives)
Available when a dependant relative (aged 16 or older) has income below a certain threshold. The deduction amount varies according to age and disability status.
Overseas dependants (important)
It is possible to include relatives living abroad (parents, etc.) as dependants for the dependant deduction, but the requirements were tightened from 2023 (Reiwa 5).
| Age of overseas dependant | Conditions for the deduction to apply |
|---|---|
| 16 to under 30 | Income of ¥480,000 or less (standard dependant deduction requirements met) |
| 30 to under 70 | Only if the person falls into at least one of the following: ① Currently studying abroad (enrolled in an overseas educational institution) ② Disabled ③ Receiving remittances of ¥380,000 or more per year from you |
| 70 or older | Income of ¥480,000 or less (qualifies as an elderly dependant) |
When claiming overseas dependants, you must submit "documents proving the family relationship" and "documents proving remittances" (see the NTA's prescribed document list). Foreign-language documents must be accompanied by a Japanese translation. For full details see the Overseas Dependant Deduction Guide.
Social insurance premium deduction
You may deduct social insurance premiums (national pension, national health insurance, etc.) that you pay yourself — i.e., amounts not withheld by your employer. The portion withheld directly by your employer is already known to your employer and need not be entered on the form. If you pay additional amounts out of pocket (e.g., paying the national health insurance for your family members), enter those amounts on the "Dependant Exemption Declaration".
Life insurance premium deduction and earthquake insurance premium deduction
Premiums paid for life insurance, personal annuity insurance, and long-term care insurance policies issued by Japanese insurers (up to specified limits), as well as earthquake insurance premiums, are deductible. Attach the "Deduction Certificate" sent by your insurer to the "Insurance Premium Deduction Declaration" and submit it to your employer.
Small-enterprise mutual aid premium deduction (iDeCo contributions)
If you contribute to iDeCo (Individual Defined Contribution Pension Plan), the full amount of your contributions qualifies as an income deduction (reported on the "Insurance Premium Deduction Declaration"). The tax-saving benefit is significant — if you are not yet enrolled, it is worth considering (→iDeCo Guide).
⑥ Items that cannot be handled through year-end adjustment and require a final tax return
The following deductions and filings cannot be processed through year-end adjustment and require a separate final tax return.
- Medical expense deduction: Available when total medical expenses for the year exceed a certain threshold. Filed via final tax return (→Medical Expense Deduction Guide).
- Home loan deduction (first year only): The home loan tax reduction requires a final tax return only in the first year. From the second year onward it can be applied through year-end adjustment (→Home Loan Guide for Foreigners).
- Furusato Nozei (when the one-stop scheme is not available): Donations to more than five municipalities, or people who must file a final tax return, cannot use the one-stop scheme and must claim the donation deduction via final tax return (→Furusato Nozei Guide for Foreigners).
- Crypto assets / side income exceeding ¥200,000 per year: A final tax return is required when total non-salary income exceeds ¥200,000 (→Crypto Tax Guide).
- Donation deduction (political parties, approved NPOs, etc.): Donation deductions other than Furusato Nozei are also claimed via final tax return.
- Casualty loss deduction (雑損控除): Deduction for losses due to natural disaster, theft, or embezzlement. Filed via final tax return.
⑦ Relationship between year-end adjustment and resident tax
The outcome of year-end adjustment (or your final tax return) is used to calculate your resident tax (都道府県民税 + 市区町村民税) for the following fiscal year. Specifically, the "Salary Payment Report" that your employer submits to the tax office is also sent to each municipality, which then determines each person's resident tax amount.
Resident tax is calculated on the prior year's income and paid over one year beginning in June of the following year (for those paying through salary withholding, deductions begin from the June salary of the following year). Properly reporting all deductions through year-end adjustment ensures that the income figure underlying your resident tax calculation is also correct.
⑧ Important points when leaving Japan or resigning
Leaving Japan mid-year
If you depart Japan mid-year and become a non-resident, you may need to complete procedures related to income earned up to the date of departure.
| Situation | Procedure |
|---|---|
| Resigned before departure with no new job in the same year | A final tax return is generally required (Feb–Mar of the following year). However, in some cases your employer may be able to perform year-end adjustment if you have submitted the "Dependant Exemption Declaration" (check with your employer) |
| Still employed at the same company after departure (overseas assignment, etc.) | Salary received from the date you become a non-resident is subject to 20.42% withholding as Japan-source income (not covered by year-end adjustment). The portion prior to departure is covered by normal year-end adjustment |
| Income after departure requiring a final tax return | You may need to appoint a "Tax Agent" (納税管理人) to handle filing on your behalf, or complete the filing before departure |
Resigning mid-year (before year-end)
Year-end adjustment is normally based on the December salary. If you resign mid-year and do not start a new job in the same calendar year, year-end adjustment will not be performed for you, and you must file a final tax return yourself (Feb 16 – Mar 15 of the following year).
If you file a final tax return after resigning, you may receive a refund of over-withheld tax depending on your circumstances.
Pension lump-sum withdrawal when returning home
Foreign nationals who were enrolled in Japanese pension (Employees' Pension / National Pension) and are returning to their home country may, under certain conditions, be eligible to claim a "pension lump-sum withdrawal" (脱退一時金). For the tax procedures involved, please refer to the Pension Lump-Sum Withdrawal Guide.
⑨ Frequently asked questions (FAQ)
Sources & references
- NTA「How to complete year-end adjustment (Reiwa 6 edition) ↗」
- NTA「No.1180 Dependant deduction ↗」
- NTA「No.1195 Special spouse deduction ↗」
- NTA「No.1160 Disability deduction ↗」
- NTA「No.1191 Spouse deduction ↗」
- NTA「No.1182 Eligibility requirements for dependant deduction for overseas relatives ↗」
- NTA「No.1411 Home loans eligible for the special home loan deduction ↗」
- Income Tax Act, Article 121 (conditions under which salaried employees are exempt from filing a final tax return)
* Tax decisions should be confirmed with a tax accountant or tax office. Rules and amounts are subject to change. Affiliate links may be used; rankings are independently chosen.