How Japanese net salary (手取り) is calculated: from gross to take-home

The number on a Japanese job offer is the gross annual figure (額面, gakumen). The number that reaches your bank account every month is the take-home (手取り, tedori), and it's noticeably smaller. The gap is a fixed stack of social insurance premiums and two taxes, each with its own base and timing. Knowing what comes out — and when — explains both the size of the cut and the classic second-year shock.

The deduction stack

Five things come out of a Japanese salary, in roughly this order:

1. Health insurance (健康保険) — covers medical care.
2. Pension (厚生年金) — the employees' pension.
3. Employment insurance (雇用保険) — unemployment and related benefits.
4. Income tax (所得税) — national, withheld monthly.
5. Resident tax (住民税) — local, billed on last year's income.

The first three are social insurance (社会保険); the last two are taxes. They behave differently enough that it's worth taking them in two groups.

Social insurance: split with your employer

Health insurance and pension are the big deductions, and the key fact is that they're split roughly in half with your employer. The headline rates look steep, but you pay about half of each — the company pays the rest as a cost you never see on the payslip.

• Pension (厚生年金) is 18.3% of your standard monthly remuneration, split evenly, so about 9.15% comes from your side.
• Health insurance runs roughly 10% depending on the insurer and prefecture, again split, so about 5% from you. Rates differ by region because each kenpo (health insurance association) sets its own.
• Employment insurance is small — a fraction of a percent on the employee side.

Two details trip people up. The premiums are calculated on the standard monthly remuneration (標準報酬月額), a banded figure set mainly from your April–June pay, not recomputed every month — so a spring with heavy overtime can raise your premiums for the year. And pension contributions are capped at an upper band, which is why very high earners see the social-insurance percentage fall as salary rises.

Income tax: withheld and then trued up

Income tax (所得税) is progressive and withheld from each paycheck against an estimate. Because the monthly withholding is only an estimate, December brings year-end adjustment (年末調整), where your employer reconciles what was withheld against what you actually owed — accounting for deductions like dependents and insurance — and you get a refund or a small extra deduction. For most company employees this replaces filing a return entirely.

Resident tax: the one-year-delayed surprise

Resident tax (住民税) is the deduction that catches every newcomer. It's a local tax of roughly 10% of taxable income, but it's billed on the previous year's income, collected the following June through May.

The consequence: in your first year in Japan, you had no prior-year income to tax, so resident tax is zero — your take-home is unusually high. In your second year, resident tax on your full first-year income kicks in, and the same gross salary suddenly yields less take-home than it did the year before. Nothing changed about your job; the delayed tax simply arrived. Plan for it, because the drop is real and it surprises people who budgeted off year-one numbers. The same delay works in reverse when you leave a high-paying job — the resident tax bill follows you into the lower-income year.

A rough mental model

For a typical company employee, the deductions land somewhere around 20% of gross, give or take with income level, age, and prefecture. A useful first approximation:

• Social insurance: ~15% (health + pension + employment, your half)
• Income tax: a few percent at typical salaries, rising with income
• Resident tax: ~10% of taxable income, from year two

So a first-year take-home might be ~82–85% of gross, and a second-year take-home closer to ~75–80% once resident tax appears — same salary, lower number.

What this estimate can't capture

The exact figure depends on inputs no rule of thumb covers: your specific kenpo's rate, your dependents, whether you're over 40 (when long-term care insurance is added), iDeCo or other deductions, and non-monthly bonuses, which are levied separately. Treat any quick calculation as an estimate, not a payslip.

To run your own numbers against the bands above, our Japan net salary calculator takes a gross figure and estimates the take-home with the social-insurance and tax split applied. If you're comparing across countries, the Korean version of this breakdown covers the four insurances and income tax on the Korean side, where the resident-tax timing quirk doesn't exist.