Year-end tax adjustment (nenmatsu chosei)

Around November your employer hands you a small stack of forms to fill in, and in December your take-home pay is slightly different from usual. That’s nenmatsu chosei (年末調整) — Japan’s year-end tax adjustment, and the reason most employees here never file a tax return at all. Here’s how it works, straight from the National Tax Agency (NTA).

What it actually does

All year, your employer withholds income tax from your salary based on estimates. Those estimates rarely match your real annual tax — especially once deductions (insurance, dependents) are counted. Year-end adjustment squares the two: in the NTA’s words, it’s the procedure to “match the withheld amount and the tax due” for income tax and the reconstruction surtax. The difference shows up as a refund (usually) or an extra deduction in your last payroll of the year.

Who’s covered — and who must file a return instead

You’re covered if you submitted the “dependent (change) declaration” to your employer. But some people fall outside year-end adjustment and must file their own final tax return (kakutei shinkoku):

The NTA is explicit that “people paid more than ¥20 million in salary are not subject to year-end adjustment,” and that a wage earner must file when non-employment income “exceeds ¥200,000.” Even when you’re fully covered, you can choose to file a return to claim deductions year-end adjustment doesn’t handle.

What you submit, and when

The forms your employer collects are deduction declarations, chiefly:

• Dependent (change) declaration — statutorily due before your first salary of the year, though in practice employers collect everything around November.
• Insurance-premium declaration — life, earthquake, and social-insurance premiums you paid yourself.
• Basic / spousal deduction declaration.

Attach the certificates (e.g. insurance-premium statements) where required, and follow your employer’s internal deadline.

The withholding slip (gensen choshu hyo)

After the adjustment, your employer issues your gensen choshu hyo — the withholding slip recording your annual income, deductions and final tax. By law it must reach you by January 31 of the following year (or within one month if you leave mid-year). Hold onto it: you’ll need it for a mortgage application, a future tax return, or proof of income.

It doesn’t touch residence tax

A common surprise: year-end adjustment settles national income tax only. Your residence tax (juminzei) is a separate local tax based on your prior year’s income and billed the following year — which is why there’s no year-end adjustment for it, and why your first year in Japan often has none deducted at all. The income figure your employer finalises here simply feeds into next year’s residence-tax bill.

Related: what those deductions look like on your payslip, and when residents do have to file a tax return.

Frequently asked questions

This is general information from NTA sources (2026-07-13); thresholds and forms (and any temporary tax measures) can change year to year, and the ¥200,000 rule is for income tax — your municipality may still want a residence-tax declaration. Confirm your own case against the current year’s NTA guidance or your employer.