🔍 Japan Tax Update (2025) / Revision of the Basic Deduction – Important for Foreign Residents Japan’s income tax basic deduction will change starting from 2025 (Reiwa 7)

This revision also affects foreign residents working in Japan.

🔹 1. Increase in the Basic Deduction

Before: ¥480,000
From 2025: ¥580,000
(For taxpayers with total income of ¥23.5 million or less)

⚠️ For higher-income taxpayers, the deduction is reduced gradually.

🔹 2. Temporary Increase for Low- and Middle-Income Earners
(2025 & 2026 only)

For 2025 and 2026, an additional temporary increase applies depending on total income:

≤ ¥1.32 million → ¥950,000
¥1.32m – ¥3.36m → ¥880,000
¥3.36m – ¥4.89m → ¥680,000
¥4.89m – ¥6.55m → ¥630,000
¥6.55m → ¥580,000

📌 This applies to national income tax only
📌 Local inhabitant tax is not affected

⚠️ 3. Important Note for Foreign Employees with Non-Salary Income

If you have income other than salary, the basic deduction used at year-end adjustment may differ from the final amount at tax return filing.

Why?
Year-end adjustment (Nenmatsuchosei)
→ Calculated based on salary income only

Final tax return (Kakutei Shinkoku)
→ Based on total income, including:
Side jobs / freelance income
Rental income
Crypto income
Overseas income (for non-permanent residents, remittance rules apply)

👉 If your total income increases, the basic deduction may be reduced, resulting in additional tax payable.

👀 Foreign Residents Who Should Pay Special Attention

・Employees with side income or freelance income
・Individuals with income both in Japan and overseas
・Non-permanent residents (for income tax purposes under
the Japanese Income Tax Act) who remit overseas income
to Japan
・Individuals who earn additional income after the
year-end adjustment