Bonus Withholding Tax in Japan: How It Is Calculated

Bonus withholding tax in Japan is calculated from the bonus after social insurance, not from the gross bonus. First, deduct the employee's health insurance, pension and employment insurance premiums from the bonus. Then look up a single percentage in the National Tax Agency's bonus rate table. You find the rate using two inputs: the employee's salary for the previous month after social insurance, and the number of dependents they declared. Multiply that rate by the post-insurance bonus and drop any fraction of a yen. Two cases use a different method based on the monthly tax table: an employee who was paid no salary in the previous month, and a bonus that is more than 10 times the previous month's salary. Both are explained below, with the National Tax Agency's own 2026 figures so that every number can be checked.

This guide is written for the group payroll team and the global payroll vendor running a Japan bonus. It covers the withholding calculation, the social insurance rules that apply to bonuses (including the caps on the standard bonus amount), the bonus payment report due within 5 days of payment, and a bonus-run checklist with owners. The full sequence of monthly and annual payroll deadlines is in our Japan payroll calendar for a multinational's subsidiary; see also our guide to Japan payroll services.

Key takeaways

• The rate comes from last month's salary, not the bonus. The bonus rate table is indexed by the previous month's salary after social insurance and the number of dependents. A large bonus paid to a modestly paid employee can therefore be withheld at a low rate.
• Social insurance comes off first. Health insurance, the child-care support levy, pension and employment insurance are deducted from the bonus before the tax rate is applied. The employee's nursing care premium is also deducted if they are aged 40 to 64.
• Two exceptions switch to the monthly table. These are no salary in the previous month, and a bonus more than 10 times the previous month's salary. In both cases the bonus is divided by 6, or by 12 if the bonus period is longer than six months.
• Insurance on bonuses is capped, but employment insurance is not. Pension stops at JPY 1.5 million per month of payment. Health insurance stops at JPY 5.73 million cumulative per April-to-March year (Japan Pension Service, FY2026).
• The bonus payment report is due within 5 days of payment. The tax withheld is remitted by the 10th of the following month. A global template that treats a Japan bonus as an ordinary off-cycle payment misses both.

What counts as a bonus in Japan payroll

For social insurance, a bonus (賞与, shoyo) is a payment made three times a year or fewer. The Japan Pension Service's guidance on bonus premiums (FY2026 page) states that a payment made four or more times a year is not a bonus. It is folded into the employee's standard monthly remuneration instead. This catches group plans that are designed elsewhere. A quarterly sales incentive paid four times a year in Japan is treated as part of monthly remuneration for social insurance. It is not a series of bonuses with their own reports and caps. Before the first Japan payout, check how many times a year the plan pays. We cover the enforceability side of group incentive plans in global bonus, commission and equity plans applied to Japan employees.

For income tax, the question is whether the payment is a bonus or ordinary salary for withholding purposes. A payment that is a bonus uses the bonus rate table described below, not the monthly table that applies to regular pay.

Step 1: Deduct social insurance from the gross bonus

Social insurance premiums on a bonus are calculated on the standard bonus amount (標準賞与額, hyojun shoyo gaku). This is the gross bonus with any amount below JPY 1,000 dropped. The employer and the employee each pay half, and the employer may deduct the employee's half from the bonus itself (Japan Pension Service, FY2026). For a Tokyo employee in the Kyokai Kenpo scheme, these are the employee-side lines for a bonus paid in fiscal 2026:

Premium	Total rate (FY2026)	Employee share	Base and cap	Source
Health insurance (Kyokai Kenpo, Tokyo)	9.85%	4.925%	Standard bonus amount, capped at JPY 5.73 million cumulative per April-to-March year	Kyokai Kenpo Tokyo; Japan Pension Service (cap)
Nursing care insurance (ages 40 to 64 only)	1.62%	0.81%	Collected with health insurance	Kyokai Kenpo Tokyo
Child-care support levy	0.23%	0.115%	Collected with health insurance from April 2026 wages; applies to bonuses	Children and Families Agency
Employees' pension insurance	18.3%	9.15%	Standard bonus amount, capped at JPY 1.5 million per month of payment	Japan Pension Service
Employment insurance (general business)	1.35%	0.50%	Actual bonus paid, no cap	MHLW

Sources for the rates: Kyokai Kenpo Tokyo branch, FY2026 rate notice (health 9.85% and nursing care 1.62% from March 2026 wages); the Children and Families Agency's support levy Q&A, which confirms the levy is also collected from bonuses, the same as health insurance and pension; and the MHLW Yamanashi Labour Bureau FY2026 employment insurance rate notice (worker 5/1000, employer 8.5/1000 from April 1, 2026). The MHLW Kanagawa Labour Bureau wage guide lists bonuses as wages included in the labour insurance base. A company in another prefecture, or in a corporate health insurance society, uses its own health rate. The method does not change.

Worked example: a JPY 500,000 bonus

Take a 35-year-old employee in Tokyo who is paid a gross bonus of JPY 500,000 in June 2026, with the same inputs as the NTA's 2026 example. The employee has declared three dependents and was paid JPY 285,454 last month after social insurance. The standard bonus amount is also JPY 500,000: the Japan Pension Service rule drops any amount below JPY 1,000, and there is none here. The employee's deductions are:

• Health insurance (Kyokai Kenpo rate): ¥500,000 × 4.925% = ¥24,625
• Child-care support levy (collected with Kyokai Kenpo health insurance): ¥500,000 × 0.115% = ¥575
• Pension (Japan Pension Service rate): ¥500,000 × 9.15% = ¥45,750
• Employment insurance (MHLW rate): ¥500,000 × 0.50% = ¥2,500
• Total employee social insurance: ¥73,450

The bonus after social insurance is JPY 426,550. If the employee were aged 40 to 64, a nursing care deduction of ¥500,000 × 0.81% (Kyokai Kenpo rate) = ¥4,050 would also apply. On the employer side, the company pays matching halves of health insurance, the levy and pension, plus 0.85% employment insurance (¥4,250, MHLW rate). That is JPY 75,200 in employer premiums on this bonus. Finance teams should accrue this amount alongside the bonus, not after it.

Step 2: Find the rate in the NTA bonus table

The standard method uses the NTA's Table of Rates for Calculating Withholding Tax on Bonuses (賞与に対する源泉徴収税額の算出率の表, shoyo ni taisuru gensen choshu zeigaku no sanshutsuritsu no hyo). The 2026 edition is published in the NTA's 2026 withholding tax tables (Reiwa 8). The table has two columns:

• The kō column (甲欄, kō-ran) applies when the employee has submitted the dependents declaration (給与所得者の扶養控除等申告書, kyuyo shotokusha no fuyo kojo to shinkokusho) to this employer. You read across the row for the employee's number of dependents.
• The otsu column (乙欄, otsu-ran) applies when the employee has not submitted that declaration to this employer.

The NTA Tax Answer No. 2523 on bonus withholding (2026 rules) sets out the standard method in three steps:

1. Take the salary paid in the previous month and subtract the social insurance premiums deducted from it.
2. In the kō column, find the row for the employee's number of dependents and the salary band that contains the step 1 amount. Read off the rate in the column for the rate to multiply by the bonus.
3. Multiply the bonus after social insurance by that rate, and drop any fraction of a yen.

In the NTA's own 2026 example, the previous month's salary after social insurance is JPY 285,454, which falls in the JPY 181,000 to under JPY 300,000 band. The employee has three dependents, so the rate is 2.042%. Our employee has the same inputs, so the same 2.042% rate from the NTA table applies: ¥426,550 × 2.042% = ¥8,710 withheld (the fraction is dropped). The employee receives ¥500,000 minus ¥73,450 minus ¥8,710, which is ¥417,840. For 2026, the NTA table rate covers both income tax and the special income tax for reconstruction, so no separate surtax line is needed.

Bonus withholding is an advance payment, not the final tax. The employee's actual tax for the year is settled through year-end adjustment in December, when the bonus is added to annual salary. Employees with annual salary over JPY 20 million are not covered by year-end adjustment and settle through their own tax return (NTA Tax Answer No. 2665, 2026 rules). For more on the wider withholding system, see our guide to withholding tax (gensen choshu) in Japan.

Step 3: The exceptions, no prior-month salary or a bonus over 10 times salary

The rate table does not work well in two situations, so the NTA switches to the monthly tax table (月額表, getsugaku-hyo) for them. Both come up regularly in foreign-owned subsidiaries. Examples are a new hire who receives a sign-on or first bonus before any Japan salary, an employee returning from unpaid leave, and a seconded executive whose Japan salary is small because most of their pay is delivered at home.

Situation	Method (NTA Tax Answer No. 2523, 2026)	NTA's 2026 example
Standard case: salary was paid in the previous month, and the bonus is no more than 10 times that salary (both after social insurance)	Rate from the bonus table × bonus after social insurance	NTA figures: ¥389,558 × 2.042% = ¥7,954
Bonus after social insurance exceeds 10 times the previous month's salary after social insurance	(1) Divide the bonus by 6 (or 12) and drop the fraction. (2) Add the previous month's salary. (3) Look up the monthly table tax on the total. (4) Subtract the monthly table tax on the previous month's salary alone. (5) Multiply by 6 (or 12).	NTA figures: bonus ¥1,668,062, salary ¥166,531, 1 dependent: ¥278,010 + ¥166,531 = ¥444,541, tax ¥16,100; tax on salary ¥1,510; (¥16,100 − ¥1,510) × 6 = ¥87,540
No salary paid in the previous month	(1) Divide the bonus by 6 (or 12) and drop the fraction. (2) Look up the monthly table tax on that amount. (3) Multiply by 6 (or 12).	NTA figures: bonus ¥769,300, 0 dependents: ¥128,216, tax ¥1,300; ¥1,300 × 6 = ¥7,800

Use 12 instead of 6 when the period the bonus covers is longer than six months. An annual bonus that covers a full year is divided by 12, and a summer bonus for a half-year period is divided by 6. The bonus calculation period is written in the group plan or in the rules of employment. It is a common gap in the data that HQ sends to the vendor.

The 10-times test explains why some global templates under-withhold on senior bonuses. A template that always applies the rate table gives a low rate to a large bonus whenever the previous month's salary is low. The 10-times exception exists to catch that case. Run the test on every bonus line before choosing a method, using after-insurance figures on both sides.

Social insurance caps on large bonuses

For senior staff, the caps on the standard bonus amount change the employer cost of a bonus as much as the tax does. Under the Japan Pension Service rules, pension is charged on no more than JPY 1.5 million of bonus per month of payment. If two bonuses are paid in the same month, they are added together before the cap applies. Health insurance is charged on no more than JPY 5.73 million of bonus in total over the April-to-March fiscal year (Japan Pension Service, FY2026). Employment insurance has no cap and applies to the full amount.

For example, take a country manager paid JPY 3,000,000 in June 2026 and another JPY 3,000,000 in December 2026, both in fiscal 2026:

• Pension: each bonus is capped at JPY 1,500,000 under the Japan Pension Service rule, so the employee pays ¥1,500,000 × 9.15% = ¥137,250 on each.
• Health insurance: the June bonus counts in full, so the employee pays ¥3,000,000 × 4.925% (Kyokai Kenpo Tokyo rate) = ¥147,750. In December, only JPY 2,730,000 counts, because that brings the fiscal-year total to the JPY 5,730,000 cap.
• Employment insurance: the employee pays ¥3,000,000 × 0.50% (MHLW rate) = ¥15,000 on each bonus, with no cap.

The health insurance cap is cumulative, so the payroll provider must know about every bonus paid since April 1. This includes bonuses paid by a previous provider or run off-cycle at HQ. It is one of the first things to reconcile after a payroll transition. Our social insurance guide for foreign employers covers the monthly side of these premiums.

Filing and paying: the bonus payment report and the withholding remittance

Two statutory steps follow every bonus, and both have short deadlines.

• Bonus payment report. The employer files the 被保険者賞与支払届 (hihokensha shoyo shiharai todoke) with the Japan Pension Service within 5 days of the payment date. It reports each insured employee's bonus so that the standard bonus amount and premiums can be set. If no bonus is paid in a month when one was scheduled, the employer files a bonus non-payment report (賞与不支給報告書, shoyo fushikyu hokokusho) instead (Japan Pension Service, FY2026).
• Withholding remittance. Income tax withheld from the bonus is paid to the tax office by the 10th of the month after the bonus is paid. The NTA Tax Answer No. 2505 (2026 rules) also allows a semi-annual special payment schedule (納期の特例, noki no tokurei) for employers that regularly pay fewer than 10 employees. Under it, tax withheld from January to June is due July 10, and tax withheld from July to December is due January 20. A June bonus at a small subsidiary using this schedule is therefore remitted on July 10 together with the half-year's salary withholding.

When the bonus is run abroad, the 5-day report is the step we most often find has no owner.The global vendor processes the payment, but nobody in Japan is told to file it. The fix is an owner, not a tool. Someone with filing access in Japan must receive the bonus register on the day it is final.

Bonuses paid from January 2027 use new tables

The NTA has already published the 2027 withholding tax tables (Reiwa 9). NTA Tax Answer No. 2523 notes that from January 2027, bonus withholding covers income tax, the new special income tax for defence and the special income tax for reconstruction. The 2027 bonus rate table and monthly table have been revised to reflect this reform. A December 2026 bonus uses the 2026 tables. The 2027 tables apply to bonuses paid from January 2027 onward. If your winter bonus might slip across the year-end, confirm which tables the vendor will load, and when, before the payment date is fixed.

Bonus-run checklist for the global payroll vendor

Most global payroll platforms can process a Japan bonus. The usual gaps are in the inputs and the Japan-side filings, not in the payment itself. This is the sequence we use, with an owner for each step. If the steps are not assigned in your current setup, use it to assign them. Our comparison of global and domestic payroll software for Japan explains where the platforms differ.

Step	What to check	Owner	When
1. Confirm the payment count	Does the plan pay three times a year or fewer? If it pays four or more times, the payments are not bonuses for social insurance.	HQ reward / HR	When the plan is designed or extended to Japan
2. Send the bonus register	Gross amount per employee, payment date, and the bonus calculation period (6 months or less, or longer)	HQ payroll	Before the vendor's cut-off
3. Confirm previous-month data	Salary paid in the previous month after social insurance; flag employees with no previous-month salary	Vendor, checked by the Japan payroll coordinator	At calculation
4. Confirm kō or otsu and dependents	Is a current dependents declaration on file? How many dependents does it list?	Japan payroll coordinator	At calculation
5. Apply the caps	Pension JPY 1.5 million per month; health JPY 5.73 million cumulative since April 1 (Japan Pension Service), including earlier bonuses from any provider	Vendor	At calculation
6. Run the 10-times test	Bonus after social insurance compared with 10 times the previous month's salary after social insurance; choose the method	Vendor	At calculation
7. Load the right tax year's tables	2026 tables for bonuses paid in 2026; 2027 tables from January 2027	Vendor	Before any year-end bonus
8. File the bonus payment report	Hihokensha shoyo shiharai todoke, or the non-payment report if a scheduled bonus is not paid	Japan payroll coordinator / sharoushi	Within 5 days of payment
9. Remit the withholding	Bonus withholding with the month's salary withholding, or on the semi-annual schedule if approved	Japan finance	By the 10th of the following month (or July 10 / January 20)
10. Accrue the employer cost	Employer health, levy, pension and employment insurance on the bonus	Japan finance / group accounting	In the month of payment
11. Carry into year-end adjustment	Bonus and withholding included in the annual figures. Employees with annual salary over JPY 20 million are not covered by year-end adjustment and settle through their own tax return (NTA Tax Answer No. 2665).	Vendor and Japan payroll coordinator	December

Common mistakes we see in Japan bonus runs

• Applying the rate to the gross bonus. The rate applies to the bonus after social insurance. Applying it to the gross amount over-withholds, and the excess is only refunded at year-end adjustment or on the employee's own return.
• Using the bonus month's salary. The table is indexed by the salary paid in the month before the bonus, not by the salary paid in the same month.
• Skipping the 10-times test. This happens most often with seconded executives and new joiners, where it leads to under-withholding that comes back as a large balance due at year-end adjustment or on the executive's own return.
• Losing the cumulative health cap. This happens after a provider change, or when one bonus is paid through a different system.
• No owner for the 5-day report. The payment is made abroad, and the filing in Japan does not happen.

Working with AQ Partners

Our Tokyo team runs bonus pay runs and monthly payroll coordination with a licensed sharoushi for foreign-owned subsidiaries, including social and labour insurance enrolment. We can take the bonus register from HQ or your global payroll vendor, check the withholding method and the insurance caps, and file the bonus payment report on time. Book a consultation to review your next Japan bonus run.