“Ultimate 2025 Guide to Income Tax Deductions in Japan: Maximize Your Refund Legally and Smartly”
🧾 1. What Are Tax Deductions in Japan?
Tax deductions (控除 / kōjo) are amounts subtracted from your taxable income before calculating the final income tax you owe.
They reduce your taxable income, not your actual tax rate.
Deductions apply to all residents of Japan who file through:
- Year-End Adjustment (年末調整) by your employer, or
- Final Tax Return (確定申告 / Kakutei Shinkoku) if you are self-employed or need additional claims.
💼 2. Major Categories of Deductions (2025 Edition)
1. Basic Deduction (基礎控除 / Kiso Kōjo)
- Amount: ¥480,000 (fixed for everyone)
- Automatically applied for all taxpayers.
- No action required.
2. Spouse Deduction (配偶者控除 / Haiguusha Kōjo)
- If your spouse’s income is ≤ ¥480,000 (≈ salary ¥1,030,000), you can claim this.
- Deduction amount: Up to ¥380,000
- If your spouse’s income is between ¥1,030,000 and ¥2,010,000, a spouse special deduction (特別控除) applies with a reduced amount.
3. Dependent Deduction (扶養控除 / Fuyō Kōjo)
- Applies to children, parents, or relatives you financially support.
- Domestic dependents: ¥380,000 per dependent (age <70).
- Elderly dependents (age ≥70):
- Living with you: ¥580,000
- Living separately: ¥480,000
- Overseas dependents are eligible if you can prove financial remittance (≥¥380,000/year).
4. Working Student Deduction (勤労学生控除 / Kinrō Gakusei Kōjo)
- For students earning less than ¥1,300,000/year while studying.
- Deduction: ¥270,000
5. Disability Deduction (障害者控除 / Shōgaisha Kōjo)
- For disabled persons or those supporting a disabled dependent.
- General disability: ¥270,000
- Severe disability: ¥400,000
- Special dependent (co-living severe disability): ¥750,000
6. Widow / Widower / Single Parent Deduction (寡婦控除・ひとり親控除)
- For single parents or widowed individuals supporting children.
- Single Parent (ひとり親控除): ¥350,000
- Widow/Widower (寡婦控除): ¥270,000
7. Social Insurance Deduction (社会保険料控除 / Shakai Hokenryō Kōjo)
- Deducts all mandatory insurance contributions, such as:
- Health insurance
- Pension (国民年金・厚生年金)
- Unemployment insurance
- Nursing care insurance
- No cap — entire paid amount is deductible.
8. Life & Medical Insurance Deduction (生命保険料控除 / Seimei Hokenryō Kōjo)
You can deduct premiums you paid for private insurance policies.
Types and limits:
| Type | Maximum deduction | Notes |
|---|---|---|
| Life insurance | ¥40,000 | For general life insurance |
| Medical insurance | ¥40,000 | For medical, cancer, or disability coverage |
| Pension insurance | ¥40,000 | For private pensions |
| Total maximum combined | ¥120,000 |
9. Earthquake Insurance Deduction (地震保険料控除 / Jishin Hokenryō Kōjo)
- Deducts part of earthquake insurance premiums.
- Maximum deduction: ¥50,000
10. National Pension (国民年金控除 / Kokumin Nenkin Kōjo)
- Payments made to Japan’s National Pension System (even as voluntary contributions) are fully deductible.
- Deduction: Full amount paid (no upper limit).
11. Small Business Mutual Aid Deduction (小規模企業共済等掛金控除)
- For self-employed or small business owners.
- Contributions to Mutual Aid Associations or iDeCo (private pension) are deductible.
- Deduction: Full contribution (up to ¥816,000 for iDeCo).
12. Housing Loan Deduction (住宅借入金等特別控除 / Jūtaku Kōjo)
- If you purchased a home with a mortgage, you can deduct 1% of your remaining loan balance each year (for up to 10–13 years).
- Conditions:
- Must live in the home.
- Loan must exceed 10 years.
- Home must meet government housing standards.
13. Medical Expense Deduction (医療費控除 / Iryōhi Kōjo)
- Applies if your total family medical expenses exceed ¥100,000/year (or 5% of income, whichever is smaller).
- Deduction: Medical expenses − ¥100,000 or 5% of income (max ¥2,000,000).
- Requires receipts or e-Tax upload.
14. Donations Deduction (寄附金控除 / Kifukin Kōjo)
- For approved donations (such as Furusato Nozei / hometown tax).
- Deduction: (Donation amount − ¥2,000)
- Requires receipts from the donation portal or local government.
15. Casualty Loss Deduction (雑損控除 / Zasson Kōjo)
- For losses from disasters, theft, or accidents.
- Deduction = Loss amount − insurance payouts − ¥100,000.
- Must be certified by your municipal office.
16. Retirement Income Deduction (退職所得控除 / Taishoku Shotoku Kōjo)
- Applied automatically when receiving severance or retirement money.
- Based on years of service:
- 20 years or less: ¥400,000 × years worked
- Over 20 years: ¥8,000,000 + ¥700,000 × (years − 20)
17. Business Expense Deduction (必要経費 / Hitsuyō Keihi)
- For freelancers/self-employed.
- Deduct expenses such as office rent, utilities, transport, and equipment.
💴 3. Tax Credits (控除後に差し引く還付金)
Tax credits reduce actual tax payable, not just taxable income.
| Type | Description | Typical Amount |
|---|---|---|
| Housing Loan Tax Credit | 1% of remaining loan balance | Up to ¥400,000/year |
| Dividend Tax Credit | Offset for dividend income | Varies |
| Foreign Tax Credit | For income taxed abroad | Actual foreign tax paid |
| Earthquake Recovery Tax | Temporary tax added to income tax | 2.1% surcharge till 2037 |
🧮 4. Example (from your image)
| Item | Amount (¥) |
|---|---|
| Income | 6,000,000 |
| Standard income exemption | 1,640,000 |
| Basic deduction | 480,000 |
| Spouse deduction | 380,000 |
| Insurance deductions | 35,000 |
| National insurance | 863,100 |
| Taxable income | 2,601,900 |
| Tax withheld | 200,000 |
| Refund | 34,000 |
This shows how deductions can reduce a 6M income to a taxable 2.6M yen, saving nearly 40–45% in tax liability.
📅 5. When and How to Claim
For salaried employees
- Submit deductions via your Year-End Adjustment (年末調整) system before the employer’s deadline (usually early November).
For freelancers/self-employed
- Claim deductions during 確定申告 (Kakutei Shinkoku) between February 16 – March 15 every year.
🧠 6. Expert Tips
✅ Keep receipts for all deductible payments (insurance, donations, medical, etc.)
✅ Use MyNumber Portal to import electronic certificates (insurance, pension, housing loan).
✅ Track remittances carefully if claiming overseas dependents.
✅ Review deduction certificates sent by your employer, banks, and insurance companies in January.
🏁 7. Conclusion
Japan’s tax system rewards individuals who maintain proper documentation and claim eligible deductions. Whether you are an employee or self-employed, knowing these categories can save you thousands of yen annually.
If you are working in Japan (like at Drivemode or any global company), make sure to submit your year-end declarations by November each year to avoid missing refunds or exemptions.