Tax on a 退職金 in Japan: 退職所得控除, the 1/2 rule, income and resident tax
Estimates only, not financial advice. What you type stays on your device. Checked against sources on 16 Oct 2026.A 退職金 of 8,000,000 yen after 10 years and 2 months of service in Japan has a 退職所得控除 of 4,400,000 yen (11 years), a taxable retirement income of 1,800,000 yen, income tax of 91,890 yen and resident tax of 180,000 yen, leaving 7,728,110 yen.
The amount before tax. The figure is the National Tax Agency’s own example, to replace.
A part year counts as a whole one: 10 years 2 months is 11 years.
¥7,728,110
3.4% of the allowance goes in tax, over 11 years of serviceTaxed apart from your salary (分離課税). Not included: officer and employee service mixed, another retirement allowance in the same year or within the last four years, and local differences in resident tax.
National Tax Agency No.1420, 2732 and 2260, and Minato City’s resident tax method, checked 16 Oct 2026. An estimate, not tax advice.
| Item | Amount |
|---|---|
| Retirement allowance | ¥8,000,000 |
| 退職所得控除 (deduction) | ¥4,400,000 |
| Taxable retirement income (1,000 yen dropped) | ¥1,800,000 |
| Income tax and reconstruction surtax | ¥91,890 |
| Municipal tax, 6% | ¥108,000 |
| Prefectural tax, 4% | ¥72,000 |
| Total tax | ¥271,890 |
| You keep | ¥7,728,110 |
2026 · Rates and rules read from the sources listed on this page (the earliest on 16 Oct 2026); they may have changed since.
Type the retirement allowance in yen, before tax.
Enter your years and months of service; a part year counts as a whole one.
Say whether you were a company officer, whether you retire because of a disability, and whether you handed in the declaration.
Read the deduction, the taxable retirement income, the income and resident tax, and what you keep.
A retirement allowance (退職金) in Japan is taxed on its own, apart from your salary (分離課税), and far more lightly. The calculator follows the National Tax Agency's method and shows each step.
1. Years of service. Count your years with the employer; any part year counts as a whole one, so 10 years and 2 months is 11 years.
2. The deduction (退職所得控除). 400,000 yen a year for the first 20 years, at least 800,000 yen, and 700,000 yen a year after that: 8,000,000 yen for 20 years, 15,000,000 yen for 30. If you retire because you became disabled, 1,000,000 yen more.
3. Taxable retirement income. Normally half of what is left after the deduction, rounded down to 1,000 yen. Two exceptions: a company officer with 5 years or less of officer service is taxed on the whole amount, and an employee with 5 years or less of service keeps the half only on the first 3,000,000 yen.
4. The taxes. Income tax uses the normal rate table on that income, then adds the 2.1% reconstruction surtax: (income x rate - deduction) x 102.1%, yen dropped. Resident tax is 6% municipal plus 4% prefectural, each rounded down to 100 yen. Both are withheld by the employer.
The declaration. Hand your employer the 退職所得の受給に関する申告書 and the right tax is withheld, with nothing more to do. Without it, 20.42% of the whole allowance is withheld and you claim the difference back with a tax return. The page shows both.
Not included. Service split between officer and employee periods, an earlier retirement allowance in the same year or the last four years, and local variations. Compare with your salary's tax on the Japan Income Tax Calculator. An estimate, not tax advice.
Subtract the 退職所得控除 for your years of service, halve what is left and round it down to 1,000 yen. Income tax is the normal rate table on that amount times 102.1%; resident tax is 10% of it. On 8,000,000 yen after 10 years 2 months, that is 91,890 yen income tax and 180,000 yen resident tax.
400,000 yen per year of service for up to 20 years, at least 800,000 yen, and 8,000,000 yen plus 700,000 yen for each year after 20. A part year counts as a whole year. Retiring because of a disability adds 1,000,000 yen.
Up to the 退職所得控除 it is. For 20 years of service that is 8,000,000 yen, for 30 years 15,000,000 yen, and for 38 years 20,600,000 yen. Only the part above it is taxed, and usually only half of that part.
The employer withholds 20.42% of the whole allowance without any deduction. You can recover the overpayment by filing a tax return (確定申告). With the declaration, the correct tax is withheld and you need not file.
For an employee with 5 years of service or less, only the first 3,000,000 yen above the deduction is halved; the rest is taxed in full. For a company officer with 5 years or less of officer service, nothing is halved.
Yes, 10% of the taxable retirement income: 6% municipal and 4% prefectural, each rounded down to 100 yen, withheld by the employer when the allowance is paid. The calculator shows both parts of the resident tax and the total you keep.
Rates and rules change; check the source before you rely on a figure.
Still stuck? Ask about Japan Retirement Allowance Tax Calculator (退職金 税金) and anybody who knows can answer. No account needed.
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