When starting a business in Japan, it is better to understand how to calculate individual salary income tax because you will receive director’s fees from your own company.

1. Taxed Income

The amount calculated by following the formula is taxed income. Salary income – salary income deduction – other deduction = taxed income

-Salary Income

Monthly fees and bonuses consist of salary income, but commuting traffic expenses are not included.

– Salary Income Deduction

Considering people working for a company also need some expenses, deductions are allowed according to income, ranging from around 500,000 yen to 2,000,000 yen.

– Other Deduction

First, there is a basic deduction of 480,000 yen. Also, all payments of social insurance fees are considered deductions. When you support your family, you can get a deduction for dependents ranging from around 400,000 yen to 600,000 yen per child or parent as well as your spouse as long as whose income is small.

2. Tax Rate

Progressive tax rates are applied according to income, ranging from 5% to 45%. Besides that, the local government taxes a uniform 10% rated resident tax.

3. Tax Amount

Tax is calculated by taxed income multiplied by the tax rate. You can get a tax amount deduction if you buy your house, donate, or do others.