(Income Tax Act, Article 121(1); e-Gov Law Search. The quotation above is in the original Japanese.)
The provision first limits itself to a person whose salary, etc. to be paid during the year is ¥20 million or less. Then, if any of the items applies, the person does not need to file. The representative one is item 1. > 一 一の給与等の支払者から給与等の支払を受け、かつ、当該給与等の全部について第百八十三条（給与所得に係る源泉徴収義務）又は第百九十条（年末調整）の規定による所得税の徴収をされた又はされるべき場合において、その年分の利子所得の金額、配当所得の金額、不動産所得の金額、事業所得の金額、山林所得の金額、譲渡所得の金額、一時所得の金額及び雑所得の金額の合計額（以下この項において「給与所得及び退職所得以外の所得金額」という。）が二十万円以下であるとき。 > > Reference translation (unofficial): 1. Where the person receives salary, etc. from a single payer of salary, etc., and income tax has been or should have been collected on all of that salary, etc. under Article 183 (withholding obligation on salary income) or Article 190 (year-end adjustment), and the total of the amount of interest income, dividend income, real estate income, business income, forestry income, capital gains, occasional income, and miscellaneous income for that year (hereinafter in this paragraph "the amount of income other than salary income and retirement income") is ¥200,000 or less.(Income Tax Act, Article 121(1), item 1; e-Gov Law Search. The quotation above is in the original Japanese.)
In plain terms: if you receive salary from one company, and income tax was withheld or settled in the year-end adjustment on all of that salary, you do not need to file when the total of your interest, dividend, real estate, business, forestry, capital gains, occasional, and miscellaneous income is ¥200,000 or less［1］. Here we confirm the three conditions. 1. You receive salary from one place. 2. Your salary income is ¥20 million or less. 3. The total of your income other than salary income and retirement income is ¥200,000 or less. If you meet all three, you do not need to file. If even one fails, this provision cannot be used. The second of the three, the ¥20 million line for salary income, is also the line for whether you are covered by the year-end adjustment at all. Article 190 of the Income Tax Act covers people whose salary, etc. confirmed to be payable during the year is ¥20 million or less［9］. A person above ¥20 million is outside the year-end adjustment, so they settle the tax by filing a final tax return themselves. Note the proviso of the provision, though. It says the exemption does not apply where the person provides real estate or the like to the company and receives payment for it［1］. A person who receives salary from two or more payers falls under item 2. Item 2 (a) says no filing is needed if the total of the salary receipts that did not go through the year-end adjustment and the income other than salary income and retirement income is ¥200,000 or less［1］. Item 2 (b) says that even if (a) does not apply, no filing is needed if the salary receipts are at most the total of ¥1.5 million and the deductions such as the social insurance premium deduction, the life insurance premium deduction, and the dependent deduction, and the income other than salary income and retirement income is ¥200,000 or less［1］. ## People who need to file, as listed by the NTA The text of the law alone is hard to follow, so we look at the NTA's list. The NTA lists the salaried employees who need to file a final tax return as follows. > 1 給与の年間収入金額が2,000万円を超える人 > 2 給与を1か所から受けていて、かつ、その給与の全部が源泉徴収の対象となる場合において、各種の所得金額（給与所得、退職所得を除く。）の合計額が20万円を超える人 > 3 給与を2か所以上から受けていて、かつ、給与の全部が源泉徴収の対象となる場合において、年末調整されなかった給与の収入金額と、各種の所得金額（給与所得、退職所得を除く。）との合計額が20万円を超える人(注) > > (注) 給与の収入金額の合計額から、所得控除の合計額（雑損控除、医療費控除、寄附金控除、基礎控除を除く。）を差し引いた金額が150万円以下で、さらに各種の所得金額（給与所得、退職所得を除く。）の合計額が20万円以下の人は、申告は不要です。 > > 4 同族会社の役員などで、その同族会社から貸付金の利子や資産の賃貸料などを受け取っている人 > 5 災害減免法により源泉徴収の猶予などを受けている人 > 6 源泉徴収義務のない者から給与等の支払を受けている人 > 7 退職所得について正規の方法で税額を計算した場合に、その税額が源泉徴収された金額よりも多くなる人 > > Reference translation (unofficial): > 1. A person whose annual salary receipts exceed ¥20 million > 2. A person who receives salary from one place, where all of the salary is subject to withholding, and whose total of the various income amounts (excluding salary income and retirement income) exceeds ¥200,000 > 3. A person who receives salary from two or more places, where all of the salary is subject to withholding, and whose total of the salary receipts that did not go through the year-end adjustment and the various income amounts (excluding salary income and retirement income) exceeds ¥200,000 (note) > > (Note) A person for whom the amount left after subtracting the total of income deductions (excluding the casualty loss deduction, the medical expense deduction, the donation deduction, and the basic deduction) from the total salary receipts is ¥1.5 million or less, and whose total of the various income amounts (excluding salary income and retirement income) is also ¥200,000 or less, does not need to file. > > 4. An officer of a family company, etc. who receives interest on a loan, rent on assets, etc. from that family company > 5. A person who has received a deferment of withholding, etc. under the Disaster Relief Act (Saigai Genmen Hō) > 6. A person who receives salary, etc. from a payer who has no withholding obligation > 7. A person whose retirement income tax, when calculated by the regular method, is greater than the amount withheld(NTA Tax Answer "No.1900 Persons who need to file a final tax return among salaried employees". The quotation above is in the original Japanese.)
The note attached to item 3 is the relaxation for a person who receives salary from two places. If the amount left after subtracting the income deductions, other than the casualty loss deduction, the medical expense deduction, the donation deduction, and the basic deduction, from the total salary receipts is ¥1.5 million or less, and the income other than salary income and retirement income is ¥200,000 or less, no filing is needed［2］. As in item 5, a person who received a deferment of withholding because of a disaster also needs to file a final tax return［2］. In this list, items 2 and 3 are the ones common among salaried employees. In both, "¥200,000" is the dividing line. Item 4 has no amount condition. An officer of a family company who receives interest or rent from the company needs to file even if the amount is ¥200,000 or less［8］. Some income is not counted toward the ¥200,000. The NTA says the following is not included: dividends, etc. on listed shares, etc. for which you chose not to file a final tax return; capital gains inside a withholding-type specified account for which you chose not to file; interest on specified bonds for which you chose not to file; interest on deposits and savings and on ordinary corporate bonds that is taxed by separate withholding; income from financial products similar to deposits; and gains on lump-sum-premium endowment insurance, among others［2］. ## Occasional income, easy to overlook When a salaried employee thinks of "income other than salary," a side job comes to mind. But even without a side job, occasional income can exceed ¥200,000. Examples are lump-sum payments from life insurance (such as maturity insurance benefits), maturity refunds from non-life insurance, prize money, and payouts from horse and bicycle racing［4］. Occasional income is calculated differently from other income. The NTA shows the following formula. > 総収入金額 - 収入を得るために支出した金額(注) - 特別控除額(最高50万円) ＝ 一時所得の金額 > > Reference translation (unofficial): Total receipts − amount spent to obtain the receipts (note) − special deduction (up to ¥500,000) = amount of occasional income(NTA Tax Answer "No.1490 Occasional income". The quotation above is in the original Japanese.)
The "amount spent to obtain the receipts" in this formula is limited to the amount directly required for the act that produced the receipts, or that accompanied the occurrence of the cause of the receipts (Income Tax Act, Article 34(2))［10］. The insurance premiums paid to obtain a maturity benefit count, but other spending cannot be subtracted. > 一時所得は、その所得金額の2分の1に相当する金額を給与所得などの他の所得の金額と合計して総所得金額を求めた後、納める税額を計算します。 > > Reference translation (unofficial): For occasional income, an amount equal to one half of the income amount is added to the amounts of other income such as salary income to obtain the total income amount, and then the tax to be paid is calculated.(NTA Tax Answer "No.1490 Occasional income". The quotation above is in the original Japanese.)
In other words, you subtract the expenses and up to ¥500,000 from the receipt, and only half of what remains is taxable［4］. Because there is a ¥500,000 special deduction and then the amount is halved, the actual burden is light. Which amount, then, is used for the ¥200,000 test? The NTA explains it as follows. > 「給与所得および退職所得以外の所得金額」が満期保険金の受領などの一時所得のみの場合については、特別控除後の金額（一時所得の金額）を2分の1にした課税の対象となる金額が20万円を超えるかどうかにより、確定申告をする必要があるかどうかを判断します。 > > Reference translation (unofficial): Where the "amount of income other than salary income and retirement income" consists only of occasional income such as the receipt of a maturity insurance benefit, whether a final tax return is needed is judged by whether the taxable amount, which is the amount after the special deduction (the amount of occasional income) halved, exceeds ¥200,000.(NTA Tax Answer "No.1903 When a salaried employee has occasional income such as a maturity refund of life insurance". The quotation above is in the original Japanese.)
In plain terms: if the only such income is occasional income, you judge by whether the amount after subtracting ¥500,000 and halving, that is, the amount actually taxed, exceeds ¥200,000［3］. It is neither the amount received nor the amount after subtracting only the ¥500,000. We check this with numbers.| Item | Example 1 | Example 2 |
|---|---|---|
| Maturity insurance benefit | ¥3 million | ¥4 million |
| Total premiums paid | ¥2.2 million | ¥3 million |
| Amount before subtracting ¥500,000 | ¥800,000 | ¥1 million |
| Occasional income (after also subtracting ¥500,000) | ¥300,000 | ¥500,000 |
| Taxable amount (half) | ¥150,000 | ¥250,000 |
| Final tax return | Not needed (¥200,000 or less) | Needed (over ¥200,000) |
(NTA Tax Answer "No.1490 Occasional income". The quotation above is in the original Japanese.)
In plain terms: prize money on prize-linked deposits, and gains on lump-sum-premium endowment insurance or lump-sum-premium non-life insurance with an insurance period of 5 years or less and the like, are taxed by separate withholding at 20.315 percent, and you cannot file a final tax return on them［4］. This is income for which filing is not "unnecessary" but "not possible." It is easy to confuse. Note also that this rate of 20.315 percent changes for income arising on or after January 1, 2027 (Reiwa 9). The rate of the special reconstruction income tax is lowered to 1.1 percent, and the defense special income tax is withheld together［4］. ## Missed deductions: money that does not come back unless you file The other thing that is easy to overlook is deductions. The year-end adjustment is a system in which the company settles everything for its employees in one batch. It cannot handle every deduction. The medical expense deduction, the donation deduction, and the casualty loss deduction are not handled in the year-end adjustment. The deductions that Article 190 of the Income Tax Act lists as settled in the year-end adjustment are the social insurance premium deduction, the life insurance premium deduction, the dependent deduction, and the like, and these three are not among them［9］. The ones you cannot receive without filing a final tax return are the medical expense deduction and the casualty loss deduction. As for the donation deduction, for furusato nozei, if you applied for the one-stop special exception, the deduction is made against resident tax without filing a final tax return［6］. The medical expense deduction is a deduction you can receive when the medical expenses you paid in a year exceed a certain amount. The NTA shows the following formula. > （実際に支払った医療費の合計額-（1）の金額）-（2）の金額 > > Reference translation (unofficial): (Total medical expenses actually paid − the amount in (1)) − the amount in (2)(NTA Tax Answer "No.1120 When you pay medical expenses (medical expense deduction)". The quotation above is in the original Japanese.)
The (2) in this formula is ¥100,000. However, for a person whose total income, etc. for the year is less than ¥2 million, it is 5 percent of the total income, etc. The maximum deduction is ¥2 million［5］. The amounts given here are those of the income tax rules for 2026 (Reiwa 8) and may change with tax reform. The expenses covered include not only your own but also those paid for a spouse or other relatives who share your livelihood［5］. For example, suppose you paid ¥300,000 in medical expenses for your family during the year, with no reimbursement from insurance or the like. If your total income, etc. is ¥2 million or more, ¥300,000 − ¥100,000 = ¥200,000 becomes the medical expense deduction. For a person with a 10 percent income tax rate, income tax goes down by about ¥20,000. If you do not file, this ¥20,000 does not come back. For the procedure of the medical expense deduction, the NTA guides as follows: "Please submit a final tax return stating the matters concerning the medical expense deduction and other necessary matters" (quoted from the NTA page in Japanese)［5］. The year-end adjustment documents alone do not complete it. When you file, you make a statement from your medical receipts and attach it to the final tax return. The NTA guides: "Prepare a 'statement for the medical expense deduction' or a 'statement for the self-medication tax system' from your medical receipts (note 1), and attach it to the final tax return" (quoted from the NTA page in Japanese)［5］. If you have a notice of medical expenses issued by your health insurer, attaching it lets you simplify the entries in the statement［5］. For medical expenses, there is one more option: the self-medication tax system. It can be used by a person who has had certain health checkups or vaccinations and bought eligible over-the-counter drugs. The NTA explains the deduction as follows: the portion of the total purchase cost of specified over-the-counter drugs, etc. for the year (excluding the portion reimbursed by insurance benefits, etc.) that exceeds ¥12,000 is the deduction, up to ¥88,000［5］. You choose either it or the regular medical expense deduction, not both. In a year when you buy a lot of over-the-counter drugs, this one may be better［5］. Furusato nozei is the same. If you donate to 5 or fewer local governments and are a salaried employee who does not need to file a final tax return, you can receive the deduction just by applying for the one-stop special exception. But if you file a final tax return, you can no longer use this exception. The NTA explains it as follows. > 確定申告を行う方は、ふるさと納税ワンストップ特例の申請が無効となるため、ワンストップ特例の申請をした分も含めて寄附金控除額を計算する必要があります。 > > Reference translation (unofficial): A person who files a final tax return has their furusato nozei one-stop special exception application invalidated, and so must calculate the donation deduction including the donations for which they applied for the one-stop special exception.(NTA Tax Answer "No.1155 Furusato nozei (donation deduction)". The quotation above is in the original Japanese.)
In plain terms: a person who files a final tax return has the one-stop special exception application invalidated, so they recalculate the donation deduction including the donations for which they applied［6］. The donation deduction amount is the donated amount minus ¥2,000. The NTA explains that "the furusato nozei amount − ¥2,000" is the income deduction, and that the donations eligible for the deduction are capped at 40 percent of total income, etc.［6］. For a person with a 10 percent income tax rate, a donation of ¥50,000 lowers income tax by (¥50,000 − ¥2,000) × 10 percent = ¥4,800. The rest is deducted from resident tax［6］. There are other people who cannot use the one-stop special exception: those who donate to more than 5 local governments, and those who file a final tax return whether or not they do furusato nozei. The NTA says this includes people who file a final tax return or a resident tax return to receive the medical expense deduction or the casualty loss deduction［6］. If you file a final tax return to receive the medical expense deduction, you must also write your furusato nozei donations on the return. This is because the donations you applied for are removed from the exception. If you forget to write them, you cannot, as it stands, receive the deduction for them. If you forgot, you can receive the donation deduction by a request for correction (kōsei no seikyū). However, if applying the donation deduction would leave the final tax amount unchanged, you cannot make a request for correction. In that case, the NTA guides you to consult the city or ward office where you live［6］. The casualty loss deduction is also not handled in the year-end adjustment. It is a deduction for when assets are damaged by a disaster, theft, or embezzlement. The NTA guides: "State the matters concerning the casualty loss deduction on the final tax return, and attach or present documents that prove receipt of the amount of unavoidable spending related to the disaster, etc." (quoted from the NTA page in Japanese)［7］. Damage caused by fraud or extortion is not covered by this deduction［7］. ## What to do: check with three questions| Question | If yes |
|---|---|
| 1. Are your annual salary receipts over ¥20 million? | You need to file a final tax return. Above ¥20 million, you are outside the year-end adjustment［9］［2］. |
| 2. Is your income other than salary (including occasional income) over ¥200,000? | You need to file a final tax return. Occasional income is judged by half of the amount after subtracting ¥500,000. If you have no other income, the receipt minus the expenses exceeding ¥900,000 means exceeding ¥200,000［3］. |
| 3. Do you want to receive the medical expense deduction, the donation deduction, or the casualty loss deduction? | You file a final tax return. This is a filing to receive a refund. It is not an obligation. The furusato nozei one-stop special exception becomes invalid, so write the donated amounts on the return too［5］［6］. |
| 4. Do you receive salary from two or more payers? | If the total of the salary that did not go through the year-end adjustment and your income other than salary income and retirement income exceeds ¥200,000, you need to file a final tax return. In certain cases this test is relaxed［1］［2］. |
| 5. Are you an officer of a family company who receives interest or rent from the company? | You need to file a final tax return even if the amount is ¥200,000 or less［8］. |
| 6. Is the tax you get by recalculating lower than the tax on your withholding slip (gensen chōshū-hyō)? | If you file a final tax return, the overpaid tax is refunded. It is not an obligation but an optional filing to receive a refund. The NTA also excludes people who would get a tax refund by filing from the people who need to file［2］. |
| If in doubt | Gather your withholding slip and the payment records (shiharai chōsho) that come from insurance companies and the like, and consult the tax office or a tax accountant (zeirishi). |