How to Register Dependents to Reduce Residence Tax in Japan
Residence tax (住民税 or juminzei) is a mandatory tax for anyone earning an income in Japan. However, you can reduce or even eliminate your residence tax by registering dependents appropriately, which can help you save money efficiently. In this article, HSB JAPAN explains the process and introduces our professional tax consultancy services to assist you in managing your taxes effectively while living in Japan.
1. What is Residence Tax in Japan?
Residence tax (住民税 or juminzei) is a local tax applied to both Japanese citizens and foreign residents earning an income in Japan. This tax is used to fund essential public services, such as education, welfare, waste management, disaster prevention, and cultural activities within the local municipality.
Anyone earning over ¥1,000,000 annually is generally required to pay residence tax.
To reduce residence tax to zero, you need to adjust your taxable income (給与所得, kyuuyo shotoku) to stay below the exemption threshold (非課税限度額, hikazei gendogaku) set by your city or ward.
2. How to Register Dependents to Reduce Residence Tax
Step 1: Determine Your Taxable Income
Your taxable income is calculated as:
Taxable Income = Total Annual Income – Deductions (insurance, dependents, etc.)
You can calculate your taxable income using online calculators provided by the Japanese Tax Agency. Input your annual income (年収, nenshuu), and it will display your taxable income. Get the link
Step 2: Identify the Residence Tax Exemption Threshold
The exemption threshold varies depending on the number of dependents and the city or ward where you live. Each city is categorized into different zones (e.g., Zone 1, 2, or 3), which determine the exemption levels.
For example, in Tokyo (Zone 1), the exemption threshold is calculated as:
Exemption Threshold = (¥350,000 × Number of Family Members) + ¥100,000 + ¥210,000
The number of family members includes:
- The head of the household
- A spouse (if their income is below the specified limit)
- Registered dependents (including children under 16, whether they live in Japan or abroad).
Step 3: Compare and Adjust to Reduce Residence Tax to Zero
After determining your taxable income and the exemption threshold, compare the two:
Taxable Income < Exemption Threshold = No Residence Tax
For example:
- If your annual income is ¥3,000,000, your taxable income might be ¥2,020,000 (after deductions).
- With two dependents: Exemption threshold = ¥1,360,000 → Tax still applies (¥2,020,000 > ¥1,360,000).
- With three dependents: Exemption threshold = ¥1,710,000 → Tax still applies (¥2,020,000 > ¥1,710,000).
- With four dependents: Exemption threshold = ¥2,060,000 → No tax (¥2,020,000 < ¥2,060,000).
If your income increases by approximately ¥300,000 annually, adding one more dependent may help you maintain exemption from residence tax.
About HSB JAPAN – Tax, Pension & Visa Consultancy
Navigating Japan’s tax system can be complex, especially for foreign residents. At HSB JAPAN, we specialize in tax refund consultancy, including residence tax, income tax, and pension claims. Our team provides:
- Professional assistance in registering dependents to optimize your tax benefits.
- Step-by-step guidance for tax filing and refund applications.
- Expertise in resolving visa and residency-related tax issues.
Our goal is to simplify the process and help you maximize your savings. Contact HSB JAPAN today to make your financial management in Japan stress-free and efficient.
We hope this guide helps you understand how to reduce your residence tax in Japan. With the right adjustments and professional support from HSB JAPAN, you can optimize your financial planning and enjoy a more comfortable life in Japan.