How does iDeCo reduce my taxes?

iDeCo contributions are fully deductible from your taxable income. For example, if you contribute ¥23,000/month (¥276,000/year) and are in the 20% income tax bracket, you save roughly ¥55,200 in income tax plus another ¥27,600 in residence tax — about ¥82,800/year in total tax savings.

What is Furusato Nozei and how does it work?

Furusato Nozei (ふるさと納税) lets you donate to local governments and receive regional gifts (rice, meat, fruits, etc.) while getting a tax credit. You pay ¥2,000 out of pocket; the rest is credited against your residence tax. There's a limit based on your income — this calculator estimates that limit for you.

Why is residence tax ¥0 in my first year?

Residence tax (住民税) is billed on your income from the previous calendar year. In your first year in Japan, you have no prior-year Japanese income, so your residence tax is ¥0. From year 2 onward, you'll pay residence tax based on what you earned the year before.

What is the 2.1% reconstruction surtax?

After the 2011 earthquake, Japan added a 2.1% surtax on top of income tax to fund reconstruction. This continues through 2037. Your income tax is multiplied by 1.021 to include this surtax.

How does the India-Japan DTAA prevent double taxation?

The Double Taxation Avoidance Agreement (DTAA) between India and Japan ensures you aren't taxed twice on the same income. If you're a Japan tax resident (183+ days), Japan taxes your worldwide income, but you can claim a foreign tax credit for taxes paid to India. Consult a cross-border tax professional for your specific situation.

What changed in the 2026 tax reform?

The 2026 reform temporarily raised the basic deduction for lower incomes (up to ¥95万 for incomes ≤¥132万) and increased the income threshold before the deduction tapers. This benefits lower and middle-income earners. iDeCo limits were also raised.

Free Tool

Japan Tax Calculator

Calculate your income tax, residence tax, and social insurance in Japan — then see how much you can save with iDeCo, Furusato Nozei, and other deductions.

Annual gross salary (¥)

¥1M¥30M

Bonus (months, optional):

Age 40+Yes

First year (no )Yes

SpouseYes

Health insurance prefecture (Kyokai Kenpo)

Only health insurance varies by prefecture. Company health unions (健康保険組合) may have different rates.

Worker type (affects iDeCo limit)

monthly contribution (¥) — max ¥23,000/mo

Annual: ¥0 — fully deductible from taxable income

donations (¥) — est. limit ~¥78,415

Credit: ¥0 (donation − ¥2,000)

Life/medical/pension insurance premiums (¥/year) — max ¥120k deduction

Medical expenses (¥/year) — amount over ¥100k is deductible

Home loan balance (¥) — 0.7% credit for up to 13 years

Monthly take-home

¥384,362

₹2,32,450

Annual take-home

¥4,612,340

₹27,89,405

Effective tax rate

8.4%

of gross

Full annual breakdown

Take-home: 76.9%

Social insurance: 14.7%

Income tax: 3.3%

Residence tax: 5.2%

Gross salary	¥6,000,000
	−¥1,640,000
	−¥580,000
	−¥881,400
Health insurance	−¥295,500
Pension ()	−¥549,000
Employment insurance	−¥30,000
Child-rearing support (2026)	−¥6,900
Income tax	−¥196,400
	−¥309,860
Take-home	¥4,612,340

₹ shown at ¥1 = ₹0.605 · ECB (2026-09-04)

Get Japan tax tips for Indians

Disclaimer: This calculator provides estimates based on 2026 Japanese tax rules. Actual tax may vary based on your specific circumstances, employer, and prefecture. Social insurance rates and iDeCo limits are approximations. This is general information, not tax or financial advice — verify with Japan's National Tax Agency or a qualified tax professional.

Sources: National Tax Agency · iDeCo Official · Furusato Nozei (MIC)

🆕 Japan proposed new PR income & pension rules for 2026 — check your outlook →

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