Income categories

Most kinds of revenues are subject to the Japanese Income tax, and only very few ones are exempt from the taxation. Commonly seen non-taxable revenues are capital gains from used goods in case they are sold after the sellers' daily use. Reselling of used goods by consumers has become popular the rapid spread of useful internet services. Meanwhile, gains from resale of goods purchased for the resale from the beginning, are taxable. The gains fall into the General Capital Gains.
Profits from receiving gifts from individuals and inheriting properties are not subject to the Income tax. Instead, they are subject to the Gift tax / Inheritance tax in accordance with the Inheritance Tax Act.
The following chart shows major categories of taxable revenues and calculation formula of the taxable amount.

Categories of income subject to the Aggregate taxation

Category Overview Income amount
Business Income derived from independent businesses of relatively large scale total amount of revenues minus necessary expenses
Real estate Income derived from leasing of land and buildings total amount of revenues
minus necessary expenses (including appropriate depreciation costs)
Employment Income derived from salaries, wages, bonuses, allowances, etc. total amount of earnings minus "Employment Income Deduction"
Income derived from dividends or distribution of profit from publicly subscribed investment trust total amount of revenues
minus a certain range of interest expenses connected to the revenues
Public Pensions Income derived from public pensions total amount of the benefits
minus "Public Pensions Income Deduction"
Capital gains
Capital gain from sales of things other than those subject to the Separate taxation sales price minus purchase price (after appropriate depreciation) and direct expenses
Occasional Accidental or occasional income excluded from the foregoing types of income. total amount of revenues minus outgoings directly related to the revenues
Miscellaneous Taxable income excluded from other types of income. total amount of revenues minus necessary expenses

An income derived from a small-scale business is included in the Miscellaneous income. As the dramatic improvement of the ICT enables more and more people to try various commercial activities in their spare time, it can sometimes be a complicated question to judge which category the profit/loss from an activity of relatively small scale should be classified into, the Business income or the Miscellaneous income. From the viewpoint of tax calculation, the Business income is eligible to wider range of preferential measures, such as the aggregation of profit and loss and the approval of Blue return, then the Miscellaneous income. Especially in case deficits are incurred for several years in a row, a facile judgement may lead to a complex argument with tax office staff.

Categories of income subject to the Separate taxation

Category Overview Income amount
Capital gains
(Stock / Shares)
Capital gain derived from sales of stocks and shares sales price minus purchase price and direct expenses
Capital gains
(Real estate)
Capital gain derived from sales of Land and Buildings sales price minus purchase price (after appropriate depreciation) and direct expenses
(Listed stocks)
Income derived from dividends from listed stocks total amount of revenues minus a certain range of interest expenses connected to the revenues

As to the DIVIDENDS income, you can apply the "Withholding taxation at Source" by choice under certain conditions.
For further details, an English guide prepared by the National Tax Agency is useful. Please check Page10 of it.

Income tax guide (NTA website)

[In Japanese]
所得税が非課税となるものとしては、家庭用動産の売却益が挙げられます。インターネット・サービスの普及により、一般消費者による物品売買が珍しくなくなりましたが、 もともと転売を目的として入手した物品の販売については非課税とはなりませんから、注意が必要です。


所得区分 概要 所得の額
事業所得 商業、サービス業、工業、農業などの独立事業から生じる所得 総収入金額から必要経費の額を控除した額
不動産所得 土地や建物の貸付けから生じる所得 総収入金額から必要経費の額を控除した額
給与所得 役員報酬、給料、賃金などの所得 給与等の収入金額から”給与所得控除額”を控除した額
配当所得(一般) 株式の配当や公募投資信託の収益の分配から生じる所得 配当等の収入金額から、対応する支払利子の額を控除した額
公的年金 公的年金の支給額にかかる所得 公的年金等の収入金額から”公的年金控除額”を控除した額
譲渡所得(一般) 財産の譲渡益(分離課税対象となる財産にかかるものを除く) 売却金額から、購入価額(減価償却後)と譲渡費用の額を控除した額
一時所得 偶然性、臨時性のある所得で、上記の所得区分に含まれないもの。 収入金額から、それを得るためにのための支出した額を控除した額
雑所得 課税される所得で、他の所得区分に含まれないもの。 総収入金額から必要経費の額を控除した額



所得区分 概要 所得の額
譲渡所得(株式等) 株式等の譲渡益 売却金額から、購入価額と譲渡費用の額を控除した額
譲渡所得(不動産所得) 不動産の譲渡益 売却金額から、購入価額(減価償却後)と譲渡費用の額を控除した額
配当所得(上場株式等) 上場株式等の配当や公募投資信託の収益の分配から生じる所得. 配当等の収入金額から、対応する支払利子の額を控除した額

さらに詳しく知りたい方には、国税庁発行の 英語版冊子が便利です。10ページをご参照ください。

Computation of Employment Income

"Employment Income deduction" and "Public Pension Income Deduction" is not well imaginable, I am afraid. They are mere estimated and provisional figures, taking various intentions into consideration in the long history. I will explain the detail of the "Employment Income Deduction" because employment income is the most common type of taxable revenues.

Total of Full-year salaries/bonuses Employment Income Deduction
~1,625,000yen 550,000yen
~1,800,000yen revenues amount × 40% - 100,000yen
~3,600,000yen revenues amount × 30% + 80,000yen
~6,600,000yen revenues amount × 20% + 440,000yen
~8,500,000yen revenues amount × 10% + 1,100,000yen
8,500,000yen~ 1,950,000yen

The deduction amount increases as the Employment Earnings amount goes larger. But the deduction amount reaches the maximum when the earnings amount is 8.5 million yen and stay 1,950,000 yen after that. This means the proportion of the taxable range goes larger along with the earnings amount.

[In Japanese]
給与所得控除や公的年金控除はうまくイメージができないかもしれません。これらは、長い歴史のなかでいろいろな思惑を反映して設定された数値にすぎないからです。 給与所得は、もっとも一般的な所得区分ですので、給与所得控除について具体的に説明します。

年間の給与等の合計額 給与所得控除の額
~1,625,000円 550,000円
~1,800,000円 収入金額 × 40% - 100,000円
~3,600,000円 収入金額 × 30% + 80,000円
~6,600,000円 収入金額 × 20% + 440,000円
~8,500,000円 収入金額 × 10% + 1,100,000円
8,500,000円~ 1,950,000円