Japanese taxes for Americans: the NTA, the IRS and how the two returns fit

Here's the deal: once you live in Tokyo, Japan taxes you as a resident, and because you're American, the IRS still taxes you too. The good news is that Japan's rates are high enough that most Tokyo salaries end up owing little or nothing extra to Uncle Sam.

The short version

• Japan has three tax statuses: non-resident, non-permanent resident and resident. Most newly arrived Americans are non-permanent residents for their first 5 years within any 10-year window [1].
• Non-permanent residents pay Japanese tax on Japan-source income and on foreign income paid in Japan or remitted to Japan. Foreign income left abroad isn't taxed by Japan [1].
• Income tax runs from 5% to 45%, plus a 2.1% reconstruction surtax on the tax [2]. The inhabitant tax adds about 10%, billed the following year by where you lived on January 1 [4][5].
• The US–Japan tax treaty and the foreign tax credit keep you from paying full tax twice, but you still file a US return every year [6].
• The US–Japan totalization agreement (in force since October 1, 2005) stops double Social Security taxes on the same work [7][8].

USD conversions use the Federal Reserve H.10 rate of October 30, 2026 (USD 1 = JPY 157.47), rounded.

Are you a Japanese tax resident?

Japan doesn't tax by citizenship the way the US does. It looks at where you live [1]:

Note that "permanent resident" here is a tax label, not your immigration status. An American on a 3-year work visa can become a full tax resident after 5 years in Japan, and a green-card-style immigration status has nothing to do with it.

If you move to Tokyo for a job meant to last a year or more, you're generally a resident from the day you arrive.

The remittance rule in plain English

For your first 5 years, the non-permanent resident rules give you real room to plan. Income you earn abroad and keep abroad, such as interest in your US savings account or dividends in a US brokerage account, isn't taxed by Japan unless you bring it into Japan [1].

The catch is how Japan counts remittances. Money you send to Japan from abroad counts as remitted foreign income only to the extent it exceeds the non-foreign-source income paid to you abroad that year [1]. Translation: Japan assumes you're sending over your foreign income first. If you transfer savings from the US to pay a Tokyo deposit in a year when your US account also earned dividends, part of that transfer can become taxable in Japan.

For Americans, there's a twist. The IRS taxes that US income anyway. If Japan doesn't tax it, there's no Japanese tax to credit, so you just pay US tax on it, which is usually fine. Keep records of what you transfer and when. A US expat tax preparer who also knows Japanese tax can check your situation before a big transfer.

How Japan taxes your income

The tax year is the calendar year, the same as in the US. Japan's national income tax rates [2]:

You multiply taxable income by the rate and subtract the deduction. Then a 2.1% special income tax for reconstruction is added on the income tax, through 2037 [1][2]. Under the fiscal 2026 tax reform, from 2027 that surtax is cut and a new defense special income tax is added, with the combined rate unchanged [2].

Filing in Japan

Most employees never file. Your employer withholds tax every month and settles the year in a December year-end adjustment. You'll need to file a final return (kakutei shinkoku) if, for example, you have side income, rental income, a large salary, or foreign income to report. The return covers January 1 to December 31, and the filing and payment deadline is March 15 of the following year [3]. You can file online with e-Tax, and Tokyo tax offices hold help sessions in February and March [3].

The inhabitant tax (juminzei)

This is the one that surprises Americans. Tokyo and your ward charge an inhabitant tax on top of national income tax [4]:

• Rates: 4% to Tokyo plus 6% to your ward, so about 10% of taxable income [4].
• Per-capita charge: JPY 1,000 to Tokyo and JPY 3,000 to the ward, plus a JPY 1,000 national forest environment tax collected with it [4]. That's about USD 32 a year in all.
• Based on last year: it's calculated on your previous year's income [5]. In your first year in Japan, you usually pay nothing, then the bill arrives in year two.
• The January 1 rule: you owe the tax to the ward where you lived on January 1. Leaving Japan later that year doesn't cancel it [5].
• How you pay: employees pay through payroll from June to May. Others get a bill payable in four installments, due at the end of June, August, October and January [5].

Plan for it when you leave Japan. If you move home in March, you'll still owe that year's inhabitant tax on the prior year's income.

The US side: you still file every year

Moving to Tokyo doesn't end your US filing:

• Form 1040 every year, due June 15 for Americans living abroad, though interest on any tax owed runs from April 15.
• Foreign tax credit (Form 1116) or the foreign earned income exclusion (Form 2555). The exclusion maxes out at USD 130,000 for 2025 and USD 132,900 for 2026 [9]. With Japan's rates plus the 10% inhabitant tax, many Americans in Tokyo do better with the credit.
• FBAR (FinCEN Form 114) if your non-US accounts together top USD 10,000 at any time in the year [10]. That's easy to hit with a Japanese salary account.
• Form 8938 (FATCA) if your foreign assets pass higher thresholds.

The NISA trap

Japan's NISA is a tax-free investment account, and your Japanese coworkers will tell you to open one. For an American, it's a bad fit. The IRS doesn't recognize NISA's tax-free status, and Japanese mutual funds and ETFs inside it are usually passive foreign investment companies (PFICs). That means punitive US tax treatment and a Form 8621 for each fund every year. Read PFICs: why foreign funds hurt Americans before you buy a single fund. Japanese company pension plans have their own issues, so ask before enrolling in anything optional.

The US–Japan tax treaty

The US and Japan signed their current income tax convention in 2003, replacing a 1971 treaty, and amended it with a protocol signed in 2013 [6]. The treaty:

• sets tie-breaker rules if both countries treat you as resident
• lowers withholding on dividends, interest and royalties between the two countries
• coordinates credits so the same income isn't taxed twice in full

What it doesn't do: like all US treaties, it has a saving clause that lets the US tax its citizens as if the treaty didn't exist, with listed exceptions. The treaty never excuses you from filing a 1040.

The totalization agreement

The US and Japan have had a totalization agreement since October 1, 2005 [8]. It prevents double Social Security taxes on the same work:

• Employees sent by a US employer for an assignment expected to last 5 years or less generally stay in US Social Security and skip Japanese pension contributions [8]. Your employer requests a certificate of coverage.
• Local hires in Tokyo usually pay into Japan's pension system only.
• Self-employed people are covered by the country where they live, with a 5-year exception for moving a US business to Japan temporarily [7].
• Health insurance can also be exempt in some cases, if you and your family have certified private coverage [7].
• Benefits: if you don't have enough credits in one system, the agreement can combine your US and Japanese work records [8].

If you leave Japan before qualifying for a Japanese pension, see Japan's pension and the lump-sum withdrawal.

A simple order of operations

1. Get your My Number and give it to your employer.
2. Keep your gensen choshu-hyo, the year-end withholding slip, every January.
3. File a Japanese final return by March 15 if you need one [3].
4. File your 1040 by June 15 (or October 15 with an extension), with Form 1116 or 2555.
5. File your FBAR for your Japanese accounts.
6. Track transfers to Japan while you're a non-permanent resident.

For a sanity check from people who've done it, ask in our community group for Americans in Japan. For your own numbers, a US expat tax preparer (or lawyer) can check your situation.

Sources

1. National Tax Agency: Income tax guide for foreigners, 2025 (residence status and scope of taxable income)
2. National Tax Agency: Income tax rates, Tax Answer No. 2260 (Japanese)
3. Minato City: Final income tax return
4. Tokyo Metropolitan Government: Guide to Metropolitan Taxes 2025
5. Toshima City: Resident's tax guide (English)
6. IRS: Japan tax treaty documents
7. SSA: Agreement between the United States and Japan
8. SSA: US international Social Security agreements
9. IRS: Figuring the foreign earned income exclusion
10. FinCEN: Report foreign bank and financial accounts

Keep reading

• Japan's pension and the lump-sum withdrawal
• Banking in Japan as an American
• Foreign earned income exclusion vs foreign tax credit
• PFICs: why foreign funds hurt Americans