Resident Tax Payroll Deduction in Japan: June and Leavers

In Japan, an employer deducts individual resident tax (住民税, juminzei) from salary through special collection (特別徴収, tokubetsu choshu). The employer does not calculate the tax. Each employee's municipality calculates it on the previous calendar year's income and sends the employer a notice by May 31. Payroll deducts the amounts on that notice from June pay through the following May, and remits each month's total to each municipality by the 10th of the following month. Because the tax runs a year behind, a new graduate or a newly arrived assignee often pays nothing in their first months, and a leaver can still owe a full year's tax after the last payday.

For a multinational's Japan KK or GK, resident tax causes few disputes over amounts and many over handoffs. The notices arrive by post or through eLTAX at the Japan entity, not at the global payroll vendor. Leavers need a municipal notice that no global offboarding checklist includes. Assignees leaving Japan create a choice that HQ mobility has to make before the final payroll. This guide covers the cycle, the June changeover, new hires, leavers and departing assignees, and ends with two checklists you can forward.

Why resident tax runs a year behind

Resident tax is a local tax, charged under the Local Tax Act (地方税法, Chihozei-ho) by the municipality where the employee had their address on January 1. It is based on income earned from January 1 to December 31 of the previous year, according to the Ministry of Internal Affairs and Communications (MIC) leaflet on resident tax for foreign residents. The resident tax for fiscal 2026, for example, is charged on 2025 income and is scheduled for deduction from June 2026 to May 2027 pay.

The municipality needs the previous year's income before it can calculate anything. That income reaches it mainly through the salary payment reports (給与支払報告書, kyuyo shiharai hokokusho) that employers file by January 31 with the municipality of each employee's January 1 address, according to the NTA guidance on withholding slips and salary payment reports (No. 7411), and through individual tax returns. Municipalities then calculate the tax in spring and notify employers by May 31. That sequence is why the new amount always starts in June, and why the amount does not change with this year's pay rises, bonuses or pay cuts.

In Tokyo, the tax has two parts, according to the Tokyo Metropolitan Government Bureau of Taxation. An income-based part is charged at 10% of taxable income (4% metropolitan and 6% municipal). A flat part is JPY 4,000 a year (JPY 1,000 metropolitan and JPY 3,000 municipal), plus the national forest environment tax of JPY 1,000 a year collected with it since fiscal 2024. Payroll does not need these rates to run special collection, but HQ finance needs them to understand why a Japan net-pay figure moves in June.

Individual resident tax is a different tax from the corporate inhabitants tax the KK or GK pays on its own profits. The two are often confused in group reporting. Our guide to Japanese corporate resident tax covers the entity-level tax.

The special collection cycle: who does what, and when

Every employer that withholds income tax from salaries must also collect its employees' resident tax by special collection, according to the Tokyo Metropolitan Government's guide to special collection. Employees cannot opt out into paying the tax themselves, except in narrow cases such as employers with two or fewer employees or irregularly paid staff. The cycle below repeats every year. Our Japan payroll calendar of every recurring deadline and who owns it shows how these dates sit alongside the other monthly and annual payroll deadlines.

When	What happens	Legal or official basis	Owner in a foreign-owned subsidiary
By January 31	Employer files salary payment reports for the previous year with each employee's January 1 municipality	Local Tax Act	AQ prepares; Japan entity files
By April 15 (Shibuya; varies by municipality)	File the request to switch to special collection (特別徴収への切替届出書) for hires who currently pay the tax directly, so they are included in the June notice (Shibuya City deadline)	Municipal procedure	HQ reports hires paying directly; AQ prepares the switch request
By May 31	Each municipality notifies the employer of each employee's tax and monthly amounts (特別徴収税額決定通知書, tokubetsu choshu zeigaku kettei tsuchisho)	Local Tax Act Art. 321-4	Japan entity receives; AQ loads to payroll
June pay to May pay	Payroll deducts the monthly amounts on the notice	Local Tax Act Art. 321-5	Global payroll vendor deducts
10th of the following month	Employer remits each month's deductions to each municipality	Local Tax Act Art. 321-5	Japan entity pays
June 10 and December 10 (if approved)	Semi-annual payment for employers with fewer than 10 regular employees: June to November deductions by December 10, December to May deductions by June 10	Municipal approval (納期の特例, noki no tokurei)	Japan entity applies and pays
By the 10th of the month after a change	Change notice for leavers, transfers and long leave	Municipal procedure under Art. 321-5	HQ notifies; AQ prepares; Japan entity files

The notice duty and the June to May collection come from Articles 321-4 and 321-5 of the Local Tax Act (e-Gov law text). The April 15 cut-off for switch requests to reach the June notice, the semi-annual dates and the change notice deadline are from Shibuya City's special collection forms page (2026). Each municipality sets its own procedures and cut-offs, so the entity's filings follow the rules of each employee's municipality, not the entity's.

A subsidiary with 15 employees living in eight different wards and cities owes eight separate municipalities every month. Each has its own amount, notice and change-notice address, although eLTAX can pay all of them in one transaction. The group's single "Japan tax remittance" line is really one amount per municipality.

What payroll does in June

June is the only month in which every employee's resident tax deduction changes in the same pay run, so the May 31 notices have to be loaded before the June cut-off. A global payroll vendor cannot fill the gap on its own, because it never receives the notices. Our guide to running Japan payroll through a global payroll vendor sets out who owns each handoff.

How the notices arrive

Paper notices are posted to the employer's address registered with each municipality, which is often a registered office, a provider's address or a former office. Since fiscal 2024, an employer that files salary payment reports through eLTAX can choose to receive the notices electronically, including the employee copies, according to Shinjuku City's guidance on electronic special collection notices. The employer copy is official in either form. The employee copy must then be passed to each employee, on paper or electronically. Our explainer on eLTAX versus e-Tax covers which portal handles which tax.

The June payroll checklist for HQ

• By early June: confirm that a notice has arrived for every employee who was on payroll on January 1 and is still employed. A missing notice usually means a salary payment report went to the wrong municipality, or an address was out of date.
• Before the June cut-off: load each employee's monthly amounts into the vendor system exactly as the notice lists them, month by month. Do not assume twelve equal instalments.
• Same run: stop deductions for anyone whose notice shows no tax, and make sure last year's amount does not carry on into June for anyone.
• Payslip check: compare June net pay with May for every employee and explain any change. In June the change comes from resident tax, so employees ask about it.
• Distribution: give each employee their copy of the notice. Employees need it to understand the deduction, and seconded staff often need it for tax equalization calculations with HQ.
• By July 10: remit the June deductions to each municipality (or, under the semi-annual rule, hold them for the December 10 payment).
• All year: load revised notices. A municipality issues a changed notice when an employee files a late return or a dependant changes, and the new amounts replace the old ones for the remaining months.

New hires: the first-year gap

Because resident tax follows the previous year's income and the January 1 address, a new employee's first deduction can come months after they join, or the employee can arrive already partway through paying a year's tax. Which case applies depends on where the employee was on January 1 and how they paid before.

Type of new hire	When resident tax deductions start	What the employer files
New graduate with no income in the previous year	Usually nothing to deduct until June of the year after they join	Salary payment report by January 31; the June notice follows
Assignee arriving from abroad, not living in Japan on January 1	No resident tax for the arrival year; deductions start the June after their first January 1 in Japan, based on the arrival year's income that is taxable in Japan	Salary payment report by January 31 to the January 1 municipality
Mid-career hire moving from another Japanese employer	Can continue the same year's special collection at the new employer	Former employer's change notice completed and sent on; new employer submits it to the municipality
Mid-career hire paying the tax directly (普通徴収, futsu choshu)	The instalments not yet due switch to payroll deduction from a month the municipality sets (Shibuya City starts them two months after the request month)	Request to switch to special collection (特別徴収への切替届出書)

Continuation at a new employer is set out in Article 321-4(5) of the Local Tax Act: the employee asks, through the new employer, for the remaining tax to be collected there, and the municipality designates the new employer to collect it. The switch from direct payment cannot cover instalments whose due date has already passed, according to Shibuya City. Employees who pay directly receive their own bills from the municipality in four instalments a year, according to the Tokyo Bureau of Taxation.

The practical point for HQ is the arriving assignee. A secondee who lands in April pays no Japan resident tax in their first year, then starts paying in June of the following year, based on the arrival year's income that is taxable in Japan. Tax equalization budgets that assume a flat monthly cost from day one overstate year one and understate year two. Our guide to Japan payroll for foreign employees covers the other first-year payroll steps for foreign staff.

When an employee leaves

When an employee leaves, the employer stops special collection from the month after the last salary, files a change notice with the municipality, and either collects the rest of the year's tax from final pay or passes it to the employee to pay directly. The month of departure decides which.

The change notice

The employer files the change notice (給与支払報告・特別徴収に係る給与所得者異動届出書, kyuyo shotokusha ido todokede-sho) by the 10th of the month after the change, according to Shibuya City. The same form is used for long unpaid leave and for transfers to a new employer that will continue the deductions. It must show the amounts already collected, as Article 321-5(3) of the Local Tax Act requires. The notice is due even if the employee owed no tax in that year, according to the Tokyo Bureau of Taxation.

Lump-sum collection depends on the month of departure

• Leaving between January 1 and April 30: the employer must collect the remaining tax in one lump sum (一括徴収, ikkatsu choshu) from the final salary or retirement payment paid by May 31, provided those payments exceed the remaining balance, under the proviso to Article 321-5(2) of the Local Tax Act. The employee does not choose.
• Leaving between June 1 and December 31: a lump sum is collected only if the employee asks for it. Otherwise the balance moves to direct payment and the municipality bills the employee, according to Minato City's resident tax FAQ.
• Leaving in May: the May deduction is the last of the fiscal year, so in most cases nothing is left to collect.

The lump sum is remitted by the 10th of the month after it is deducted, like any other month's collection. In practice, the lump sum is often larger than HQ expects: an employee whose last pay is in February can have the March, April and May instalments taken from final pay on top of the normal February deduction. Tell the employee before the final payslip, not after.

Assignees leaving Japan

For an assignee returning home, the choice between a lump sum and direct payment matters more, because the employee will no longer be in Japan to receive or pay the bills. A taxpayer who cannot pay the resident tax before leaving must appoint a tax agent (納税管理人, nozei kanrinin) resident in Japan and notify the municipality, according to the MIC leaflet. For a June to December departure, the cleanest route is usually for the assignee to ask for the lump sum from final pay, so nothing is left behind.

The January 1 rule creates a second, later bill. Resident tax is charged on anyone with a Japan address on January 1, and the MIC leaflet states that the same applies to someone who leaves Japan on or after January 2. An assignee who leaves in, say, March is therefore charged resident tax on the whole previous year's income, with the bill issued in June, after they have gone. If the March departure lump sum covers only the current fiscal year, that second bill still arrives and needs a tax agent, or a group decision about who pays it under the tax equalization policy. Departure dates around the new year should be set with this in mind. If the assignee is also claiming a pension refund, our post on the Japan pension lump-sum withdrawal for expats covers that separate process.

Checklist for every leaver

• At resignation notice: HQ or the Japan entity tells payroll the last working day and the last pay date. For assignees, global mobility confirms the departure date from Japan.
• Before the final pay run: for January to April leavers, calculate the lump sum for the remaining months and deduct it if final salary or retirement pay covers it. For June to December leavers, ask the employee in writing whether they want a lump sum.
• Assignees leaving Japan: recommend the lump sum for June to December departures; for departures between January 2 and May 31, confirm the tax agent and who will pay the bill issued that June for the new fiscal year (the January to April lump sum does not cover it).
• Mid-career moves: if the employee is joining another Japanese employer that will continue the deductions, complete the employer section of the change notice and send it to the new employer.
• By the 10th of the following month: file the change notice with each leaver's municipality, showing amounts already collected, and remit any lump sum.
• Within one month of leaving: issue the leaver's withholding slip (源泉徴収票, gensen choshu hyo), as NTA No. 7411 requires. The leaver's salary payment report goes to the municipality of their address at departure by the following January 31, as covered in our post on gensen choshu hyo and the January 31 payroll filings.
• After the final run: remove the employee's monthly amounts from the vendor system so no deduction runs on a later payment, such as a delayed commission.

If the Japan entity is changing payroll provider during the year, make sure resident tax notices, change notices already filed and any pending lump sums are on the handover list. Our post on transitioning Japan payroll between providers without a compliance gap covers the handover sequence.

Working with AQ Partners. Our Tokyo team provides monthly payroll coordination with a licensed sharoushi, employee life-cycle filings and the annual payroll statutory reports for foreign companies operating in Japan, including loading each year's resident tax notices, preparing change notices for leavers and preparing the January 31 salary payment reports, alongside your global payroll vendor. Book a consultation to review who owns each resident tax step in your Japan payroll.