---
title: "Individual income tax for employees and sole proprietors in Japan — overview"
url: https://memocore.ai/memos/6a5f62b563d783ad6870934d
project: "Doing Business in Japan"
tags: "tax-sole-proprietor, japan-business"
updated_at: "2026-07-21T12:14:45.813Z"
---

# Individual income tax for employees and sole proprietors in Japan — overview

Income tax (所得税) in Japan is progressive and combines with municipal (resident) tax and a temporary reconstruction surtax. Topics covered: rates and the maximum overall burden; bracket boundaries; how resident tax is paid; the income threshold below which a return is not required; the difference between the employer's year-end adjustment (年末調整) and a personal return (確定申告); the loss-offset rule for a sole proprietor's business loss against salary income (損益通算); the deduction for working students; the 2025 increase in basic deductions and the April 2026 withholding tax reform; legal ways to reduce income tax; the withholding certificate (源泉徴収票); the rule on salary accrual date versus payment date for tax purposes; the filing deadline for 確定申告; and the fact that income from work physically performed in Japan is taxable regardless of residency status. See the linked detail records for each topic.