所得税 vs 住民税 vs 源泉徴収 vs 年末調整: Japanese Income Tax, Resident Tax, Withholding, Year-End Adjustment, and Payroll Tax Words Explained

It is your first month working at a Japanese company. You receive your 給与明細（きゅうよめいさい） — your pay slip — and the take-home amount is noticeably less than your monthly salary. Several lines are deducted, but the kanji is dense and the numbers are unclear. You see 所得税（しょとくぜい）, 源泉徴収（げんせんちょうしゅう）, and something called 住民税（じゅうみんぜい）. What do all of these mean? And what is this 年末調整（ねんまつちょうせい）form your HR department just handed you?

Japan’s payroll tax system has four core words that every employee — and especially every foreign resident — needs to understand. These words appear on salary slips, official tax notices, year-end forms, and conversations with HR. Mixing them up leads to confusion, missed filings, and occasionally unexpected bills from your city hall.

This guide breaks down 所得税（しょとくぜい）, 住民税（じゅうみんぜい）, 源泉徴収（げんせんちょうしゅう）, and 年末調整（ねんまつちょうせい）— what each word means, how they relate to each other, where they appear, and the most common mistakes learners and foreign residents make.

Quick Answer: 所得税 vs 住民税 vs 源泉徴収 vs 年末調整

Here is the short version before the full explanation.

所得税（しょとくぜい）— National Income Tax

所得税 is Japan’s national income tax (国税（こくぜい）). It is calculated on your income and withheld every month directly from your salary. The rate is progressive — the more you earn, the higher the percentage.

住民税（じゅうみんぜい）— Local Resident Tax

住民税 is Japan’s local resident tax (地方税（ちほうぜい）). It is based on your income from the previous year and collected the following year starting in June. New residents in Japan are often surprised when 住民税 suddenly appears on their pay slip after their first full year.

源泉徴収（げんせんちょうしゅう）— Withholding at Source

源泉徴収 is not a tax itself — it is the method of collecting tax. Your employer deducts tax from your salary before you receive it. The same system applies to freelance payments and dividends. 源泉徴収 is the deduction mechanism; 所得税 is what is being deducted.

年末調整（ねんまつちょうせい）— Year-End Tax Adjustment

年末調整 is the process your employer carries out at year-end to compare the total amount of 所得税 withheld throughout the year against the actual tax you owe. If too much was withheld, you receive a refund. If too little was withheld, the difference is collected. This process happens automatically through your company — it is not something you file yourself.

What Does 所得税 Mean?

所得税 as National Income Tax

所得税（しょとくぜい）is made up of three kanji: 所（しょ）meaning “place” or “that which is,” 得（とく）meaning “gain” or “income,” and 税（ぜい）meaning “tax.” Together, 所得税 means “tax on income.” It is a 国税（こくぜい） — a national tax paid to the Japanese government (国税庁（こくぜいちょう）, the National Tax Agency).

Monthly Withholding from Salary (天引き)

For company employees, 所得税 is automatically deducted from your monthly salary before you receive it. This deduction is called 天引き（てんびき） — literally “sky-deduction,” meaning it is taken from the top before the money reaches you. The monthly amount withheld is an estimate based on your monthly pay — it is reconciled at year-end through 年末調整.

Progressive Tax Rates (累進課税)

所得税 uses a 累進課税（るいしんかぜい） system — a progressive tax structure where higher income is taxed at higher rates. The rates range from 5% for low incomes to 45% for the highest bracket. For most company employees earning an average income, the effective rate is significantly lower than the top bracket because deductions and allowances reduce the taxable income.

Example sentences:

毎月の給与から所得税が引かれます。
Maitsuki no kyuuyo kara shotokuzei ga hikaremasu.
Income tax is deducted from my salary every month.

所得税は国に納める税金です。
Shotokuzei wa kuni ni osameru zeikin desu.
Income tax is a tax paid to the national government.

今年の所得税率は20%でした。
Kotoshi no shotokuzei-ritsu wa 20% deshita.
My income tax rate this year was 20%.

Yuka

So every month my company takes 所得税 directly from my pay before I even see it? I do not have to do anything myself?

Rei

Exactly — that automatic deduction is called 源泉徴収. Your company handles the calculation and payment to the government on your behalf. All you need to do is submit the forms they ask for at year-end so the final number can be adjusted correctly.

What Does 住民税 Mean?

住民税 as Local Resident Tax

住民税（じゅうみんぜい）is made up of 住民（じゅうみん）meaning “resident” and 税（ぜい）meaning “tax.” It is a 地方税（ちほうぜい） — a local tax paid to the prefecture (都道府県（とどうふけん）) and municipality (市区町村（しくちょうそん）) where you live. Unlike 所得税, which goes to the national government, 住民税 funds local services — schools, roads, garbage collection, and local administration.

Two Components: 道府県民税 and 市区町村民税

住民税 is actually two taxes combined into one payment:

• 道府県民税（どうふけんみんぜい） — prefectural resident tax (roughly 4% of taxable income)
• 市区町村民税（しくちょうそんみんぜい） — municipal resident tax (roughly 6% of taxable income)

Together they total approximately 10% of your taxable income, though the exact amount depends on your municipality and applicable deductions. You pay both components together as one line on your pay slip or one annual notice.

Based on Previous Year’s Income (前年所得ベース)

This is the most important — and most confusing — feature of 住民税. Unlike 所得税 which is calculated on your current year income, 住民税 is calculated based on your income from the previous year. The tax authority determines how much you owe in, say, 2026, based on what you earned in 2025. Payments then begin in June 2026 and run through May 2027.

January 1st Address Rule (1月1日時点の住所)

住民税 is assessed based on where you are registered as a resident on January 1st (1月1日（いちがつついたち）) of the tax year. If you moved cities in March, you still pay 住民税 to the city where you lived on January 1st for that entire tax year. This often surprises people who move mid-year.

The First-Year Confusion: Why New Employees Don’t Pay in Year 1

Many new employees — especially those who just started their first job in Japan — are surprised when 住民税 suddenly appears on their pay slip about 14 months after they started working. Here is why:

If you start working in April 2025 and your income in 2025 is your first year of significant earnings in Japan, 住民税 for that income will only be calculated and charged starting June 2026. In your first year (2025), no 住民税 appears on your slip because there was no prior-year income to base it on. Then in June 2026, it suddenly appears — and the amount can feel large because it may include partial arrears or simply because your salary has since increased.

This same pattern catches foreign residents off guard. If you arrived in Japan in 2024 with no Japan-sourced income, you will not see 住民税 on your slip until June 2025 at the earliest.

Example sentences:

住民税は前の年の収入に基づいて計算されます。
Juuminzei wa mae no toshi no shuunyuu ni motozuite keisan saremasu.
Resident tax is calculated based on the previous year’s income.

6月から住民税が給与から引かれるようになりました。
Rokugatsu kara juuminzei ga kyuuyo kara hikareru you ni narimashita.
Starting in June, resident tax began being deducted from my salary.

今年は初年度なので住民税はまだかかりません。
Kotoshi wa shonendo nanode juuminzei wa mada kakarimasen.
Since this is my first year, resident tax has not started yet.

What Does 源泉徴収 Mean?

Withholding at Source — a Collection Method, Not a Tax

源泉徴収（げんせんちょうしゅう）literally means “collecting at the source (源泉（げんせん）).” 源泉 originally refers to the source of a river — the point where water originates. In tax terms, it means collecting tax at the point where income is generated, before it flows to you. 徴収（ちょうしゅう）means “to collect” or “to levy.”

The key point: 源泉徴収 is a method, not a tax. What is being withheld is 所得税 (and sometimes復興特別所得税（ふっこうとくべつしょとくぜい）, the reconstruction special income tax). 源泉徴収 is simply the mechanism that makes your employer responsible for deducting and remitting that tax on your behalf.

Who Is Subject to Withholding?

源泉徴収 applies in several situations beyond just salaried employment:

• 会社員（かいしゃいん）employees — monthly salary withholding is standard
• アルバイト（part-time workers） — withholding applies at a flat rate unless you submit a 扶養控除等申告書（ふようこうじょとうしんこくしょ）to your employer
• フリーランス（freelancers） — certain types of freelance income (writing, design, translation, lectures) are subject to withholding by the client, at a rate of 10.21% on payments up to 1,000,000 yen
• Dividends and interest — investment income is also subject to withholding

源泉徴収票（げんせんちょうしゅうひょう）— The Withholding Slip

At year-end, every employer must issue a 源泉徴収票（げんせんちょうしゅうひょう） — a withholding statement. This document summarizes your annual salary, the total amount of income tax withheld, and various deductions applied. You will need this document when:

• Filing a 確定申告（かくていしんこく）— self-assessed tax return
• Applying for a mortgage or loan in Japan
• Starting a new job and submitting to your new employer
• Renewing your residence visa (in some cases)

Reading Your Pay Slip (給与明細)

On your 給与明細（きゅうよめいさい） (salary slip), you will see a deductions section (控除（こうじょ）) that typically includes:

The 所得税 line on your pay slip represents the 源泉徴収 amount for that month — the income tax withheld at source.

Example sentences:

給与から所得税が源泉徴収されます。
Kyuuyo kara shotokuzei ga gensen choushuu saremasu.
Income tax is withheld from (your) salary at source.

フリーランスの報酬にも源泉徴収が適用されます。
Furiirlansu no houshuu ni mo gensen choushuu ga tekiyou saremasu.
Withholding also applies to freelance fees.

年末に源泉徴収票をもらいました。
Nenmatsu ni gensen choushuu-hyou wo moraimashita.
I received my withholding statement at year-end.

What Does 年末調整 Mean?

The Employer’s Year-End Reconciliation

年末調整（ねんまつちょうせい）is made up of 年末（ねんまつ）meaning “year-end” and 調整（ちょうせい）meaning “adjustment” or “reconciliation.” Every year, typically in November or December, your employer carries out this process to calculate your actual annual income tax liability and compare it to the total amount already withheld month by month.

Because the monthly withholding is based on an estimate (using simplified tax tables), the total withheld through the year rarely matches your exact tax liability precisely. 年末調整 corrects this difference.

Getting a Refund (還付)

In most cases, employees receive a 還付（かんぷ） — a tax refund — after 年末調整. This happens because the monthly withholding tables are set slightly high to avoid underpayment. The refund appears as a positive adjustment on your December or January pay slip. For many employees, this small refund is the only visible result of 年末調整.

追徴（ついちょう）or additional collection occurs when the withholding was too low — for example, if you had a significant mid-year raise or received a large bonus that pushed you into a higher tax bracket.

Forms You Submit for 年末調整

Your employer will typically ask you to complete one or more of these forms:

When You Must File 確定申告 Instead

年末調整 is done by your employer and covers most employees’ tax situations automatically. However, you must file a 確定申告（かくていしんこく） — a self-assessed tax return — yourself in the following cases:

• Your annual salary exceeds 20,000,000 yen (小得が2,000万円超)
• You have income from a second job or side business (副業（ふくぎょう）)
• You are a freelancer with no employer to run 年末調整
• You have rental income, investment gains, or other non-salary income above 200,000 yen
• You claim medical expense deductions (医療費控除（いりょうひこうじょ）) that your employer cannot process
• You left your job and are no longer employed at year-end

Important: Freelancers do NOT receive 年末調整. This is one of the most common misconceptions among people who shift from employment to self-employment in Japan. As a freelancer (フリーランス), you are responsible for filing 確定申告 every year between February 16th and March 15th.

Example sentences:

11月に会社から年末調整の書類が届きました。
Juu-ichigatsu ni kaisha kara nenmatsu chousei no shorui ga todokimashita.
The year-end adjustment documents arrived from my company in November.

年末調整で5,000円の還付がありました。
Nenmatsu chousei de go-sen en no kanpu ga arimashita.
I received a refund of 5,000 yen through the year-end adjustment.

副業がある場合は年末調整だけでは不十分です。
Fukugyou ga aru baai wa nenmatsu chousei dake de wa fujuubun desu.
If you have a side job, the year-end adjustment alone is not sufficient.

Yuka

So the company does 年末調整 automatically? I was worried I had to do something complicated by myself!

Rei

For most employees, yes — the company handles it. You just need to fill in the forms they hand you, like the 扶養控除等申告書 listing any dependents. But if you have a side business or freelance work, you will also need to file 確定申告 yourself in February or March.

所得税 vs 住民税

These two are the most commonly confused pair because both appear on your pay slip and both are called “tax.” The difference lies in who receives the money, when it is calculated, and when you start paying.

住民税決定通知書 — The Annual Tax Notice

Every May or June, your local city hall sends your employer (or directly to you, depending on collection method) a 住民税決定通知書（じゅうみんぜいけっていつうちしょ） — the annual resident tax determination notice. This document states exactly how much 住民税 you owe for the coming year (June to May), calculated from your previous year’s income as reported via your 確定申告 or 年末調整. Your employer uses this number to deduct the correct amount monthly.

Common Mistake: “I Do Not Pay 住民税 Yet”

A very common mistake among new foreign residents: believing that 住民税 does not apply to them because nothing appears on their slip in the first year. 住民税 absolutely applies — it simply takes one full year to appear. Once it starts, it does not stop unless you deregister from your address (転出届（てんしゅつとどけ）) upon leaving Japan permanently.

源泉徴収 vs 年末調整

These two are often confused because they both relate to income tax and both happen through your employer. The distinction is straightforward: one is the ongoing monthly process, the other is the annual correction.

Common learner mistake: Some learners think 源泉徴収 and 年末調整 are the same process because both involve tax and both go through the employer. They are not the same. 源泉徴収 is the ongoing monthly deduction; 年末調整 is the one-time annual correction. You cannot have 年末調整 without 源泉徴収 happening first — the adjustment only makes sense because monthly withholding was an estimate.

Another common mistake: Thinking 年末調整 is optional. It is not — it is a legal obligation for employers to carry out for eligible employees. If your employer does not do it, that is a legal violation on the employer’s part.

所得税 vs 源泉徴収

This pair is subtle but important. People sometimes say 源泉徴収 when they mean 所得税, which is technically imprecise.

Natural Phrasing to Know

所得税を納める（しょとくぜいをおさめる）— to pay income tax
所得税が源泉徴収される（しょとくぜいがげんせんちょうしゅうされる）— income tax is withheld at source
源泉徴収税額（げんせんちょうしゅうぜいがく）— the amount of tax withheld

Salaried employee example:
毎月、所得税が給与から源泉徴収されます。
Maitsuki, shotokuzei ga kyuuyo kara gensen choushuu saremasu.
Every month, income tax is withheld from my salary at source.

Freelance example:
クライアントが報酬から所得税を源泉徴収して納付します。
Kuraianto ga houshuu kara shotokuzei wo gensen choushuu shite noufu shimasu.
The client withholds income tax from the fee and remits it to the tax office.

住民税 and Payroll: 特別徴収 vs 普通徴収

住民税 can be collected in two different ways, and which method applies to you depends on your employment situation.

特別徴収（とくべつちょうしゅう）— Employer-Withheld Collection

特別徴収 means your employer deducts 住民税 from your monthly salary and pays it to the city on your behalf — just like 所得税 withholding. This is the standard method for company employees and part-time workers registered with a single employer. The annual 住民税 amount is divided into 12 equal monthly payments (June to May of the following year).

On your pay slip, you will see the 住民税 line from June onward. If you started a new job in the middle of the year, your new employer will take over the 特別徴収 payments from the month you join.

普通徴収（ふつうちょうしゅう）— Direct Payment to City Hall

普通徴収 means you receive a tax bill directly from your city hall and pay it yourself — either in a lump sum or in four installments (June, August, October, and January). This is the standard method for:

• フリーランス (freelancers)
• Self-employed individuals (自営業者（じえいぎょうしゃ）)
• Part-time workers with multiple employers
• People who have left their company and are not currently employed

If you work at a company, you are normally switched to 特別徴収 automatically. If you prefer 普通徴収 for privacy reasons (for example, to prevent your employer from seeing your total resident tax amount, which could reveal side income), you can sometimes request this, though employers are increasingly required by municipalities to use 特別徴収 for all employees.

住民税 After Leaving a Job (退職後)

This is one of the most financially surprising moments for people who quit their jobs in Japan. When you leave a company, one of two things happens with your remaining 住民税:

• If you leave in June–December: Your employer typically deducts the remaining monthly payments from your final salary all at once (一括徴収（いっかつちょうしゅう）). This can significantly reduce your final pay.
• If you leave in January–May: The remaining balance switches to 普通徴収. You will receive a bill directly from the city, typically in June or shortly after.

Either way, leaving a job does not cancel your 住民税 obligation. The amount was already determined from your previous year’s income and is legally owed regardless of your current employment status.

Moving and the January 1st Rule

If you move to a different city or prefecture during the year, you still pay 住民税 to the city where you were registered on January 1st of that year. Your new city does not start billing you until the following year. Always update your 住民票（じゅうみんひょう）— residence registration — promptly when moving so there is no confusion about your January 1st address.

Decision Rule: Which Word Do You Need?

Use this flowchart to identify which term applies to your situation.

Are you talking about a TAX paid on income?
  |
  YES
  |
  +-- Is it paid to the NATIONAL government?
  |     YES → 所得税（しょとくぜい）— national income tax
  |     NO → Is it paid to your PREFECTURE / CITY?
  |               YES → 住民税（じゅうみんぜい）— resident tax
  |
Are you talking about HOW tax is collected from salary/payment?
  |
  YES → 源泉徴収（げんせんちょうしゅう）— withholding at source
  |
Are you talking about the EMPLOYER'S YEAR-END calculation
that reconciles monthly withholding with actual annual tax?
  |
  YES → 年末調整（ねんまつちょうせい）— year-end adjustment
  |
Are you talking about SELF-FILING your own tax return?
  |
  YES → 確定申告（かくていしんこく）— self-assessed tax return

住民税 sub-question:
  Is 住民税 deducted via your EMPLOYER each month?
    YES → 特別徴収（とくべつちょうしゅう）
    NO, you pay city hall directly?
    YES → 普通徴収（ふつうちょうしゅう）

As a quick reference, here is a summary of all key vocabulary from this article:

\ Learn Japanese tax vocabulary with a personal native teacher!/

Quick Quiz

Test yourself! Choose the correct Japanese word from this article. Answers are below.

1. You look at your Japanese pay slip and see a deduction labeled 「所得税」. Which tax is this — national income tax or local resident tax?

2. You started your first job in Japan in April 2025. In June 2025, you notice that ______ has NOT appeared on your salary slip yet. Why?

3. Your company deducts income tax from your salary every month before you receive it. What is the Japanese term for this collection method?

4. In November, your HR department asks you to fill in the 扶養控除等申告書. Which year-end process are they conducting?

5. You quit your company job and become a freelancer. Your resident tax is now collected via a direct bill from city hall instead of through your employer. What is this payment method called?

6. A friend says: “As a freelancer, my company will handle the 年末調整 for me.” Is this correct?

—

Answers:

1. 所得税（しょとくぜい）is the national income tax, collected by the Japanese national government. Local resident tax is 住民税（じゅうみんぜい）.

2. 住民税（じゅうみんぜい）has not appeared yet. This is because 住民税 is based on the previous year’s income. Since you had no Japan income before April 2025, the first 住民税 deduction will not begin until June 2026.

3. 源泉徴収（げんせんちょうしゅう）— withholding at source. This is the mechanism your employer uses to deduct and remit income tax on your behalf.

4. 年末調整（ねんまつちょうせい）— the year-end tax adjustment. The 扶養控除等申告書 is the form that declares your dependents so the correct deductions can be applied.

5. 普通徴収（ふつうちょうしゅう）— direct payment to city hall. This is the standard collection method for freelancers and the self-employed.

6. Incorrect. Freelancers do NOT receive 年末調整. Since there is no employer to run the adjustment process, freelancers must file 確定申告（かくていしんこく）— a self-assessed tax return — themselves between February 16th and March 15th each year.

Have you ever been confused by a Japanese pay slip or a 住民税 bill that appeared out of nowhere? Which of these four terms do you find most confusing? Let us know in the comments below!

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