Year End Tax Adjustment Japan 2026: New Rules Explained

The year end tax adjustment in Japan, called nenmatsu chosei (年末調整), is when your employer recalculates your income tax for the year and settles the difference with what was withheld, usually on your December paycheck.

For 2026, the Reiwa 8 (2026) tax reform brings major changes:

• The basic deduction rises to as much as ¥1.04 million
• The minimum employment income deduction rises to ¥740,000
• The income tax-free salary threshold climbs from ¥1.6 million to ¥1.78 million
• The revised rules take effect on December 1, 2026, so many employees may see a larger refund than usual

Annual salaries above ¥20 million are excluded, and more than ¥200,000 of non-salary income generally means also filing a final return between February 16 and March 15, 2027.

This guide covers who qualifies, which forms to complete, what changed for 2026, and the extra rules for foreign residents.

Year End Tax Adjustment Japan 2026: Key Facts

Sources: Japanese National Tax Agency (国税庁), Reiwa 8 (2026) basic deduction increase , April 2026 summary of withholding tax revisions , and Reiwa 9 withholding tax tables .

What Is Nenmatsu Chosei and How Does It Work?

Under the Income Tax Act (所得税法), employers withhold income tax at source, called gensen choshu (源泉徴収), from each salary and bonus and pay it to the tax office by the 10th of the following month.

Why monthly withholding is just an estimate

Monthly withholding follows a government table based on salary and declared dependents. It ignores insurance premiums, a child turning 19, a spouse's income change, or a mid-year raise, so by December it rarely matches your actual tax liability.

Refund or additional payment

Your employer totals your income, applies your deductions, and compares the correct tax with what was withheld:

• If too much was withheld, you get a tax refund, normally with your December or January salary.
• If too little was withheld, the shortfall is deducted from that paycheck.

For most wage earners with one employer and no side income, this is the year's only tax procedure. Unlike the United States, where every employee files a return, Japan puts the work on employers.

How the Year End Tax Adjustment Has Changed From 2024 to 2027

The rules have changed every year since 2024, so even year-old guides are often wrong.

2026: the ¥1.78 million threshold

With salary income only, you pay no national income tax up to ¥1.78 million: a basic deduction of up to ¥1.04 million (¥620,000 statutory base plus a ¥420,000 special addition) plus the ¥740,000 minimum employment income deduction.

This applies to national income tax only. The resident tax basic deduction stays at ¥430,000, so you may still owe resident tax below ¥1.78 million, and the ¥1.3 million social insurance threshold for dependents is unchanged.

The basic deduction (kiso kojo, 基礎控除) depends on your total income:

The special addition applies only to tax residents.

Why the 2026 refund may be larger than usual

January to November 2026 withholding used the old tables without the special addition. The National Tax Agency applies the new amounts only in the December adjustment, so the 2026 benefit arrives in one lump sum.

A worked example

An employee earning ¥4 million with about ¥600,000 in social insurance premiums and no other deductions:

Your figure depends on your own income, premiums, and deductions.

What starts in January 2027

A 1% defense special income tax (boei tokubetsu shotokuzei, 防衛特別所得税) begins, while the reconstruction special income tax (fukko tokubetsu shotokuzei, 復興特別所得税) falls from 2.1% to 1.1% and runs to 2047. The combined 2.1% is unchanged, and the 2026 nenmatsu chosei is unaffected.

Who Gets a Year End Tax Adjustment (and Who Does Not)

You are eligible if

You are generally covered if all apply:

• You are a resident of Japan for tax purposes (kyojusha, 居住者)
• You receive employment income from a Japanese company or other salary payer in Japan
• You submitted the dependents declaration form (explained below) to that employer, making it your main employer
• Your annual salary is ¥20 million or less

Nationality does not matter: foreign employees are treated exactly like Japanese employees.

You are not eligible if

• Annual salary above ¥20 million. You file your own final income tax return.
• Freelancers and self-employed individuals. With no salary payer, you file a final return.
• Secondary employers. Only the employer holding your dependents declaration form adjusts your tax. Depending on your other employer and other income, you may also need to file.
• You left a job mid-year and were not re-employed by December. You file a final return, which usually produces a refund.
• Non-residents. People with no domicile in Japan and less than one year of continuous residence pay a flat withholding rate and are outside the system.

A common myth is that over ¥200,000 of side income disqualifies you. It does not; you simply also file a final return for that income.

The Nenmatsu Chosei Timeline for 2026

Most companies set an internal deadline in mid or late November. Miss it, and you may lose your deductions in the adjustment and have to recover them through an individual return at your local tax office.

The Forms You Will Be Asked to Complete

Most employees complete three forms, plus a fourth for a housing loan. All are in Japanese, though many cloud payroll systems have English screens.

1. Dependents declaration form

The Kyuyo Shotokusha no Fuyo Kojo-to (Ido) Shinkokusho (給与所得者の扶養控除等（異動）申告書), or Declaration for Exemption for Dependents of Employment Income Earner, lists your dependents and makes this employer your main salary payer. Many employers collect the 2027 version at the same time.

It asks for My Numbers (マイナンバー) unless already on file. From 2026, the dependents column becomes "withholding-eligible relatives" and includes relatives aged 19 to 22 whose total income is above the ¥620,000 dependent limit but no more than ¥1 million, so their deduction is reflected in monthly withholding.

2. Combined basic deduction form

One sheet covers four declarations: the basic deduction, the spousal deduction, the specific relative special deduction (tokutei shinzoku tokubetsu kojo, 特定親族特別控除), and the income adjustment deduction. Its full name is Kyuyo Shotokusha no Kiso Kojo Shinkokusho ken Haigusha Kojo-to Shinkokusho ken Tokutei Shinzoku Tokubetsu Kojo Shinkokusho ken Shotoku Kingaku Chosei Kojo Shinkokusho (給与所得者の基礎控除申告書兼給与所得者の配偶者控除等申告書兼給与所得者の特定親族特別控除申告書兼所得金額調整控除申告書).

You estimate your 2026 total income (and your spouse's, if claiming) on a new 2026 layout reflecting the changed tiers.

3. Insurance premium deduction declaration

The Kyuyo Shotokusha no Hokenryo Kojo Shinkokusho (給与所得者の保険料控除申告書) covers premiums you paid yourself for:

• Life insurance, medical and nursing care insurance, and private pension insurance
• Earthquake insurance
• Social insurance premiums paid outside payroll, such as national pension premiums you paid for a family member
• Small business mutual aid contributions, including iDeCo contributions you pay directly

4. Housing loan deduction form

Year one is claimed through a final return. From year two, submit the Kyuyo Shotokusha no Jutaku Shakuiriekin-to Tokubetsu Kojo Shinkokusho (給与所得者の住宅借入金等特別控除申告書) with your bank's year-end loan balance certificate.

Supporting documents checklist

Have ready:

• Life and earthquake insurance premium certificates mailed by your insurer
• National pension and iDeCo contribution certificates
• The withholding tax statement from any previous employer in 2026
• Housing loan documents (second year onward)
• Income estimates for your spouse and dependents
• Relationship and remittance documents for dependents living overseas

A growing number of certificates can be downloaded via Mynaportal (マイナポータル) into year end adjustment software, but many still arrive by post, and losing one is a common reason a deduction gets missed.

Deductions You Can and Cannot Claim Through Your Employer

Deductions that require a final return

Medical expenses are a deduction foreign residents often overlook; costs above the threshold are recovered through a final return.

Furusato nozei (ふるさと納税) donors to five or fewer municipalities can use the one-stop special exception, but filing a return for any reason cancels it, so donations must then go on the return.

What Foreigners Need to Know About the Year End Tax Adjustment

Your tax residency status decides what is taxed

• Permanent resident for tax purposes (eijusha, 永住者): taxed on worldwide income (a tax-law category, not immigration permanent residency)
• Non-permanent resident (hi-eijusha, 非永住者): a foreign national who has lived in Japan for five years or less in the past ten years; taxed on Japan-source income plus foreign income paid in or remitted to Japan
• Non-resident (hikyojusha, 非居住者): taxed only on Japan-source income, generally at a flat 20.42% withheld on employment income, with no year end adjustment

This is unrelated to your visa. Nenmatsu chosei covers only Japanese salary, so taxable overseas rent, dividends, or freelance fees go on a final return.

Overseas dependents: stricter rules and Japanese translations

Claiming family abroad requires:

• Relationship documents (shinzoku kankei shorui, 親族関係書類): official documents proving your relationship with the relative, such as a family register or documents issued by a foreign government, together with a copy of the relative's passport where required
• Remittance documents (sokin kankei shorui, 送金関係書類): bank transfer records showing money you sent that year to support the relative
• Japanese translations: any document written in a foreign language needs a Japanese translation attached

Since 2023, relatives aged 30 to 69 qualify only if studying abroad, disabled, or receiving at least ¥380,000 from you that year. Records must come from a bank or card company; handing over cash does not count.

Incorrect dependent claims are a common reason for tax office corrections involving foreign employees.

Leaving Japan before December

Your employer runs a departure year end adjustment on salary paid up to your departure. Ask HR to process it before your last day and request your withholding tax statement.

In 2026, a departure adjustment completed before December 1 uses the old deduction amounts. You can recover the difference by filing a final income tax return under the revised rules, which a tax agent (nozei kanrinin, 納税管理人) can file for you once you are abroad.

Otherwise, file any final return before departure or appoint a tax agent (nozei kanrinin, 納税管理人). MailMate's separate tax representative service covers this role for property-related taxes.

Resident tax follows you after you leave

Resident tax (juminzei, 住民税) is charged by your January 1 municipality on last year's income, so 2026 income is billed from June 2027 to May 2028. After leaving your job or Japan, it often switches to mailed payment slips you must still pay.

Joining a company mid-year or arriving from abroad

Job changers must give their new employer the previous company's withholding tax statement (gensen choshuhyo, 源泉徴収票), or file themselves. If you arrived from abroad in 2026, salary earned before becoming a resident is generally excluded.

Tax treaties

Treaty exemptions for students, trainees, or short-term assignees are usually claimed in advance with a treaty application form through your employer, not automatically in nenmatsu chosei.

When You Must File a Final Income Tax Return (Kakutei Shinkoku)

Everything nenmatsu chosei misses is settled through the final income tax return, kakutei shinkoku (確定申告).

Mandatory filing triggers

You must file for 2026 income if:

• Your salary exceeded ¥20 million
• You had one employer and more than ¥200,000 of income other than salary and retirement income, such as freelance fees, rental income, or overseas income
• You received salary from two or more employers and the secondary salary plus other income exceeded ¥200,000
• You left a job during 2026 and were not re-employed by year end, with tax still owed
• You are self-employed

Retirement income is normally taxed at source if you submitted the retirement income declaration.

Filing to get money back

File anyway to claim medical expenses, first-year housing loan credits, donations, or missed deductions; refund-only returns open January 1, 2027 for five years. Side income of ¥200,000 or less still generally goes to your municipality for resident tax.

How to file

File February 16 to March 15, 2027:

• Online through e-Tax, the National Tax Agency's official electronic filing portal, using your My Number Card
• In person at your local tax office (zeimusho, 税務署)
• By mail to the tax office covering your address

Pay by bank transfer, direct debit, or the online tax payment system.

👉Learn more: How to File Your Final Income Tax Return in Japan

Blue and white returns for side income

Sole proprietors choose a blue tax return (aoiro shinkoku, 青色申告) or white return (shiroiro shinkoku, 白色申告). For 2026, a blue return allows up to ¥650,000 with double-entry books plus either e-Tax filing or qualifying electronic books (¥550,000 if filed on paper). From 2027 income:

• ¥750,000: double-entry books, e-Tax filing, and qualifying electronic books
• ¥650,000: double-entry books filed via e-Tax
• ¥100,000: double-entry books filed on paper (down from ¥550,000)

To use blue status for 2027, file the application by March 15, 2027 (or within two months of starting a new business). Good record-keeping is now worth real money.

Running Your Own KK or GK? You Are the Salary Payer Now

If you pay yourself a salary from a Kabushiki Kaisha (株式会社, KK) or Godo Kaisha (合同会社, GK), your company must run nenmatsu chosei for you and any staff:

• Withhold income tax monthly and pay it to the tax office by the 10th of the following month (or twice a year under the special payment schedule for small companies)
• Collect year end adjustment forms and deduction certificates from every employee, including you
• Recalculate tax using the 2026 rules that take effect on December 1, 2026
• Issue withholding tax statements and file salary payment reports with municipalities by January 31, 2027
• Keep payroll records aligned with the company books for the corporate tax return

With the basic deduction, dependent thresholds, and life insurance limits all changing at once, 2026 is harder to run by hand than any recent year.

👉 See how MailMate's Tax Retainer plan handles monthly withholding tax →

Common Year End Tax Adjustment Mistakes Foreigners Make

Not declaring overseas income

As explained in the residency section above, once you have lived in Japan for more than five of the past ten years, overseas rent and investment income are taxable and must go on a final return.

Claiming dependents incorrectly

Common errors include claiming relatives over the ¥620,000 income limit, both spouses claiming the same child, and claiming overseas relatives aged 30 to 69 without proof of ¥380,000 in remittances.

Overlooking available deductions

The 2026 life insurance special rule, national pension paid for a family member, and medical expenses are often missed, and missing any one means paying more tax than you owe.

Misclassifying income types

Freelance income, crypto gains, and overseas employment are different income categories; the wrong one changes your tax and deductions.

Poor record-keeping

Certificates arrive by post in Japanese each autumn, and receipts pile up all year. Lost paperwork is the simplest way to lose a deduction.

How MailMate Helps With Year End Tax Paperwork

Nenmatsu chosei is your employer's job; the paperwork around it (certificates, receipts, remittance records, Japanese bills) is yours. MailMate helps foreign residents and business owners manage it:

• Expense and receipt capture: photograph receipts and certificates, extract the data automatically in English and Japanese, and search them later when your accountant or the tax office asks
• Bill-pay and invoice management: track paper and electronic invoices in one searchable place, catch duplicates, and store them in line with the Electronic Bookkeeping Act (電子帳簿保存法)
• Bookkeeping and tax filing: for KK and GK owners, receipts, reconciliation, and Japanese-compliant books in one ledger, with corporate tax filed by a licensed tax accountant (税理士) through MailMate

The free System of Record plan keeps receipts and books in one place, and you pay only when you file.

Compare MailMate's bookkeeping plans →

In Closing

The 2026 year end tax adjustment is the most generous in years, but the benefit depends on the forms you submit and the documents you keep.

Return your forms before HR's deadline with every certificate attached. With side income, overseas dependents, medical costs, or plans to leave Japan, check whether you also need a final return by March 15, 2027.

No article replaces a licensed tax accountant, especially with income in more than one country.

If paperwork is what slows you down, MailMate helps foreign residents and business owners in Japan capture receipts, manage Japanese invoices, and keep their books ready for tax season.

Frequently Asked Questions

What is the year end tax adjustment in Japan?

The year end tax adjustment in Japan, or nenmatsu chosei, is your employer's annual recalculation of your income tax, settled against tax withheld. It happens in November and December, with any refund in your December or January salary. For most single-employer staff it replaces a personal tax return.

Who is not eligible for nenmatsu chosei?

Employees whose annual salary exceeds ¥20 million, freelancers, the self-employed, and non-residents are not covered. A second employer that does not hold your dependents declaration form will not adjust your tax, and people who left a job and were not re-employed by December are also excluded. These groups file a final income tax return instead.

Do I still need to file a final income tax return after the year end adjustment?

Yes, with over ¥200,000 of non-salary income, secondary salary above that threshold, or salary over ¥20 million. It is also the only way to claim medical expenses and the first-year housing loan credit. For 2026 income, file February 16 to March 15, 2027 via e-Tax, in person, or by mail.

What changed in the 2026 year end tax adjustment?

The statutory base of the basic deduction rose to ¥620,000, or ¥1.04 million with the special addition for total income of ¥4.89 million or less in 2026 and 2027. With the ¥740,000 minimum employment income deduction, salary up to ¥1.78 million is free of national income tax, though resident tax may still apply. Dependent limits rose to ¥620,000, effective December 1, 2026.

Can foreigners claim dependents who live outside Japan?

Yes, with relationship documents and bank remittance records, translated into Japanese if needed. Relatives aged 30 to 69 qualify only if studying abroad, disabled, or receiving at least ¥380,000 from you that year.

What happens to my tax if I leave Japan before the end of the year?

Your employer runs a departure year end adjustment on salary paid up to your departure date. File any required return before leaving or appoint a tax agent, and arrange payment of resident tax on last year's income.

When will I receive my year end tax adjustment refund?

Usually with your December salary, sometimes January's, paid by your employer. For 2026, many employees may see a larger refund because the enhanced deductions are settled only in December. Refunds from a final return are paid to your bank account by the tax office.

What is a withholding tax statement and why do I need it?

The gensen choshuhyo is issued by January 31 and shows last year's salary, deductions, and tax withheld. You need it for a final return, a new employer, and proof of income. Keep it with your resident tax certificates, which immigration uses for visa and permanent residency reviews.