2026 TAX GUIDE
What is taxable income?
Taxable income is the amount left after employment-income and personal deductions, before applying the tax rate.
Direct answer
Which amount becomes taxable income?
Gross income minus the employment-income deduction gives income; subtract deductions again to get taxable income.
From gross salary to taxable income
Subtract the employment-income deduction from gross salary, then subtract insurance, basic, dependent, and other deductions. The remainder is taxable income.
Why the rate band is not the salary band
Income-tax bands use taxable income rather than gross salary, so the amount entering the rate table is lower after both layers of deductions.
Rounding and resident-tax timing
Income tax includes statutory rounding such as truncating taxable income below ¥1,000. Resident tax also uses prior-year income and a different notice cycle.
How taxable income is formed
| Step | Calculation |
|---|---|
| 1 | Salary income − employment-income deduction = employment income |
| 2 | Employment income + other income = total income |
| 3 | Total income − insurance, basic, and other deductions = taxable income |
| 4 | Apply the progressive rate to taxable income |
| 5 | Add reconstruction special income tax |
Worked examples
- Do not multiply a JPY 5m salary by 20%; apply deductions first and then tax the resulting taxable income.
- The same applies at JPY 8m: the tax band is based on taxable income, not gross salary.
- Resident tax uses prior-year income, so its timing and amount differ from current-year income tax.
Official source and check date
Rules checked: 31 August 2026 · Calculator logic updated: 4 September 2026 · Page updated: 4 September 2026
National Tax Agency: 2026 income-tax reformFrequently asked questions
How does this affect take-home pay?
The calculator applies the same 2026 engine to taxes and employee insurance.
Is annual income enough for an exact answer?
No. Age, dependents, prefecture, bonuses, and standard remuneration also matter.
Where can I verify the figures?
Inline links point to the NTA, MHLW, Japan Pension Service, and other official sources.
What if rules change?
The update history records the effective date and rule version.
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