Taxes: The Horrible, God-Awful Truth

During your first working year here in Japan, you’ll likely be pleasantly surprised by the low national income tax. It’s like 7 or 8 percent. As for local taxes, city and prefectural ones, you won’t pay those during your first year here. But, you’ll be hit with the local tax after the first year of living and working in Japan. If you live in either Tokyo or Kanagawa Prefecture, it can be as high as ￥150,000 for the entire year. What’s worse, you still have to pay the local tax for that first year that you were here, so it’s up to you to put enough aside each month to cover this amount. Some companies will offer to do this for you, but others don’t. The companies that never inform you about that first year of unpaid local tax probably don’t do so because it could affect your decision to sign on for another year. Many teachers give notice prior to finishing their first or second contract and are surprised to find that when they get their last paycheck, a big chunk has been taken out to cover that local tax.

This year local taxes have increased. Many people are finding them to be quite burdensome. For example, an eikaiwa instructor making ￥250,000 per month and living in Tokyo can expect something similar to the following to happen to his or her monthly paycheck:

￥250,000

             - ￥55,000 (rent)

             - ￥9,000 (income tax)

             - ￥16,000 (local tax)

             - ￥ 3,000 (health insurance)

=             ￥167,000

From that you’ll have to pay your bills (gas, electric, phone, water, internet, etc…) and keep up whatever lifestyle you’re used to. If you’re not worried about saving too much, this amount should be fine to keep up a fun, single lifestyle. For those who are interested in saving some money, expect to see the amount you can save go down after the first year by about ￥30,000 due to required enrollment in a public health insurance scheme as well as the local tax deductions.