How much will be your actual NET income working in Japan?
Not getting reluctant after confirming your bank account of first-month payment, it is essential to understand the salary system in Japan to know what is going to be your net income (salary after deduction) from the gross salary that you have had offered from the company.
There are some cases of causing trouble between the employer if you misunderstand that the Gross Salary equals what you will receive in your bank account.
If you are a worker who will start working in Japan, let’s understand the salary system correctly to experience working life in Japan without worrying.
Social Insurance and Tax deducted from your salary
Payment of Social insurance and Tax is mandatory in Japanese law.
What you receive in your bank account is less than the gross salary because the Social insurance and Taxes are deducted from your monthly gross wage.
Here are the details of Social insurance and Taxes that will be deducted.
Social Insurance
It is an obligation for workers between 20 to 60 years old to be enrolled in the insurance to provide pensions to the elderly generations and people who require a social security. People from 65years old can receive an employee’s pension in Japan.
Medical insurance system to be arranged in cases for illness, injury, childbirth, or death. All people are obliged to enroll in health insurance in Japan. Therefore, the policy’s individual coverage of every medical expense is basically 30% of the total fee.
The government will carry out reemployment support for the job transferring period while continuing stable living when leaving the job or in case of unemployment. Employment insurance is to maintain this supporting system. Employment insurance can be received from the government if you fulfill certain conditions.
Tax
Tax for personal income. The tax rate is calculated from your monthly salary amount.
Tax for maintaining public services such as education, welfare, firehouse, emergency, or waste management. There are two separate tax structures. One is the Prefectural Tax to pay for Prefecture (To-Do-Fu-ken), and the other is City/locality tax, which is to pay for the local municipal government (Shi-Cho-Son).
Payment of the Resident Tax begins from the second year after starting your work since the Tax is calculated based on your previous year’s income.
So how much will you get?
Overall, how much is the NET amount of actual payment you will receive after these deductions?
- In case your gross salary is JPY 200k/month
The actual NET payment is around 160k/month.
| Salary | ￥200,000 |
| Employee’s pension | ￥18,300 |
| Health Insurance | ￥9,840 |
| Employment Insurance | ￥600 |
| Income Tax | ￥3,770 |
| Resident Tax | ￥7,292 |
| Total Deductions | ￥39,802 |
| NET Payment | ￥160,198 |
Resident Tax is not deducted if you are in your first year working in Japan.
Resident Tax calculated presuming the total income of JPY 200k/month plus JPY 400k annual bonus
- In case your gross salary is JPY 150k/month
The actual NET payment is around 120k/month.
| Salary | ￥150,000 |
| Employee’s pension | ￥13,725 |
| Health Insurance | ￥7,380 |
| Employment Insurance | ￥450 |
| Income Tax | ￥2,150 |
| Resident Tax | ￥4,508 |
| Total Deductions | ￥28,213 |
| NET Payment | ￥121,787 |
Resident Tax is not deducted if you are in your first year working in Japan.
Resident Tax calculated presuming the total income of JPY 200k/month plus JPY 400k annual bonus.
According to your contract with your company, House rent and utility fees are charged additionally in typical cases.
Summary
In some cases, workers who have less knowledge in the system choose to leave their jobs after recognizing their NET income afterward.
Let’s have your life in Japan as planned by preparing cautiously, including checking your GROSS and NET income difference while choosing your job.
