When calculating income, your profit is determined by subtracting expenses from revenue. However, when filing your income tax return, there are additional deductions that can be applied to further reduce your taxable income. These are called income deductions. In this article, we will review the major income deductions that may apply to foreigners living in Japan.
Note:
If you are a non-resident for the entire year, only the following deductions apply to you:
- Basic Exemption
- Deduction for Casualty Losses
- Deduction for Donations
Basic Exemption
The basic deduction applies if your total income is 25,000,000 yen or less.
| Total Income | Deduction Amount |
| 24,000,000 yen or less | 480,000 yen |
| 24,000,001 yen to 24,500,000 yen | 320,000 yen |
| 24,500,001 yen to 25,000,000 yen | 160,000 yen |
Exemption for Spouses / Special Exemption for Spouses
If you have a spouse, you may be eligible for this deduction, but it depends on your spouse’s income. If your spouse’s income is too high, you may not be able to apply this deduction. The deduction amount varies depending on:
- Your total income
- Your spouse’s income
For more details, please [Read more about spouse and dependent deductions here].
Deduction for Social Security Premiums
If you have paid social insurance premiums or have them deducted from your salary, you may be eligible for this deduction. The exact amount will depend on your specific payments.
For more details, please [Read more about social insurance premium deductions here].
Deduction for Donations
If you have made donations to the government or local public organizations, you may be eligible for this deduction. The amount you donated is not automatically deducted; instead, a specific formula is used to calculate the deductible amount.
- Deduction Amount = Total Donation – 2,000 yen
(Note: Certain income-based limits may apply. Please consult with us for more details.)
Deduction for Medical Expenses
If you have paid medical expenses, you may be able to apply for this deduction. However, the scope of expenses eligible for the medical expense deductions is defined. The calculation excludes amounts covered by insurance.
- Deductible Amount = Total Medical Expenses – Insurance Amount – 100,000 yen
(Note: The deductible amount may vary based on your income. Please consult with us for further information.)
Deduction for Casualty Losses
If you have suffered a loss due to a disaster, theft, or other unforeseen events, you may be able to claim a deduction for the losses incurred. This can help reduce the taxable amount of your income.
By understanding these deductions, you may be able to reduce your taxable income and lower the amount of income tax you need to pay. If you are unsure about your eligibility or need assistance, please feel free to consult with us.
If you have any questions, please feel free to reach out.
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