Year-End Adjustment Glossary

This page explains the purpose of the year-end tax adjustment and terminology used in it, as well as the documents required for the procedures.

For more detailed information, refer to the National Tax Agency’s website. The information on this page is updated every year around the end of September. Explanation in Japanese (National Tax Agency) Simplified explanation in English (National Tax Agency)

For additional information on this year’s tax reforms, also refer to our SmartHR Mag. article (Japanese only): 2024年年末調整業務の注意点。定額減税の計算方法と2025年適用の内容も解説｜SmartHR Mag.

Basic Terminology

Income (収入)

If working at a company as an employee, this refers to the salary and bonuses received from this company. If self-employed, this refers to the revenue from your business.

In addition to the above, income also includes any non-monetary compensation, such as the company housing, food, and gift vouchers.

Earnings (所得)

Earnings is the amount left after subtracting the so-called “necessary expenses” (必要経費) from your income.

When working at a company, you usually receive what is called “employment earnings” (給与所得). This is the amount left after subtracting various deductibles (= an amount that the government allows you to subtract from your income to lower taxes) from the salary and bonuses you receive. These deductibles (控除) include the employment earnings deductible (給与所得控除額), the earnings amount adjustment deductible (所得金額調整控除額), and the specified expenditure deductible (特定支出控除額).

Necessary Expenses (必要経費)

Necessary expenses are the expenses incurred either directly or indirectly in order to earn income.

For more details, please refer to No.2210 やさしい必要経費の知識｜国税庁 (Japanese) or No.12015 Scope of necessary expenses | National Tax Agency (English)

Withholding Tax (源泉徴収)

All residents of Japan who earn an income must calculate, declare, and then pay their taxes based on the earnings for that year.

However, when a person is working at a company, the company usually subtracts the income tax from the employee’s salary and then pays it to the government on behalf of the employee.

This is referred to as "withholding tax" (源泉徴収).

Year-End Tax Adjustment (年末調整)

It is a process where companies check if the income tax withheld (= paid to the government on behalf of the employee) from an employee’s salary and bonuses throughout the year matches the total tax that the employee should pay for the year. If there’s any difference, the company either collects the underpaid amount from the employee, or refunds them anything that was overpaid, adjusting it so that the correct tax amount is paid.

The documents you need to submit to report your deductions are explained in the “Types of Declaration Forms Created by SmartHR” section further down on this page.

Final Tax Return (確定申告)

The year-end adjustment is intended to calculate the income tax only for employment earnings; meanwhile, the final tax return provides an exact calculation of the income tax for all earnings for that year.

Strictly speaking, all residents of Japan who earn an income must submit a final tax return, but if you are employed by a company, the year-end tax adjustment replaces this process. Because of this, most people do not actually need to submit a final tax return themselves.

For more details on final tax returns, see No.12011 Final tax return | National Tax Agency (English).

Deductions (控除)

This word generally means "subtracting a certain amount from a total amount".

By properly declaring your deductions, you might be able to reduce your income tax and resident tax.

The types of deductions related to year-end tax adjustment are explained in the “Types of Deductions” section further below.

Dependent Relatives (扶養親族)

A dependent relative (or often simply “dependent”) is a person who meets all of the requirements below as of December 31 of that year.

• They are: a) a relative (other than a spouse) related to you by blood within the 6th degree or by marriage within the 3rd degree (= in-law), or b) a foster child (that you have been charged to raise by the prefectural governor), or c) an elderly person that you have been charged to care for by the mayor of the municipality.
• You (the taxpayer) and this relative share living expenses
• This relative’s total annual earnings (所得) do not exceed is 480,000 yen (=income does not exceed 1.03 million yen, if they only have employment income)
• This relative has not received any salary payments as a family employee (事業専従者) of a blue return (青色申告) taxpayer during that year and they are not a family employee (事業専従者) of a white return (白色申告) taxpayer

(*) For more details, refer to No.1180 扶養控除｜国税庁 (Japanese only). Additionally, for details on dependents residing overseas, see No.12016 Exemption for dependents, etc., for relatives living outside Japan | National Tax Agency

Spouse Sharing Living Expenses (同一生計配偶者)

A spouse sharing living expenses is a person who meets all of the requirements below as of December 31 of that year (as per the Income Tax Act of Japan):

Important: A common-law partner is not considered an official spouse in Japan!

• You (the taxpayer) and your spouse share living expenses
• Your spouse's total annual earnings do not exceed 480,000 yen
• Your spouse has not received any salary payments as a family employee (事業専従者) of a blue return (青色申告) taxpayer during that year and they are not a family employee (事業専従者) of a white return (白色申告) taxpayer

For details, refer to 同一生計配偶者｜国税庁 (Japanese only).

Spouse Qualifying for Tax Deductions (控除対象配偶者)

For your spouse to be considered qualifying for tax deductions, 1) your (the person receiving the deduction) total earnings must not exceed 10 million yen, 2) and your spouse must meet all the following conditions as of December 31:

• Your spouse must be a legal spouse according to the Civil Code of Japan (common-law partners do not qualify!)
• You (the taxpayer) and your spouse share living expenses
• This relative’s total annual earnings (所得) do not exceed is 480,000 yen (=income does not exceed 1.03 million yen, if they only have employment income)
• Your spouse has not received any salary payments as a family employee (事業専従者) of a blue return (青色申告) taxpayer during that year and they are not a family employee (事業専従者) of a white return (白色申告) taxpayer

For details, refer to 控除対象配偶者｜国税庁 (Japanese only).

Spouse Qualifying for Elderly Deductions (老人控除対象配偶者)

This refers to a spouse who qualifies for the above tax deductions (控除対象配偶者) and is also 70 years or older as of December 31 of that year.

For details, refer to 老人控除対象配偶者｜国税庁 (Japanese only).

Spouse Qualifying for Deductions at Source (源泉控除対象配偶者)

If your total earnings do not exceed 9 million yen (= income not exceeding 10.95 million yen if you only have employment income) and your spouse meets the following requirements, they qualify for tax deduction at the source.

• You (the taxpayer) and your spouse share living expenses
• Your spouse’s total annual earnings do not exceed 950,000 yen (= income not exceeding 1.5 million yen if they only have employment income)
• Your spouse has not received any salary payments as a family employee (事業専従者) of a blue return (青色申告) taxpayer during that year and they are not a family employee (事業専従者) of a white return (白色申告) taxpayer

Information for a spouse who qualifies for tax deduction at the source must be listed in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書). However, this has no direct effect on the exact calculation of the year-end adjustment. (*) This information is used to withhold tax from an employee’s salary and bonus paid by a company.

Types of Deductions

Basic Deduction (基礎控除)

This deduction is applied to all people whose total earnings do not exceed 25 million yen.

To apply for the basic deduction, you need to fill out the necessary information on the "Application for Basic Exemption of Employment Income Earner and Application for Exemption for Spouse of Employment Income Earner and Application for Exemption of Amount of Income Adjustment" (給与所得者の基礎控除申告書 兼 給与所得者の配偶者控除等申告書 兼 年末調整に係る定額減税のための申告書 兼 所得金額調整控除申告書).

Your Total Earnings (Yen)	Deductible Amount (Yen)
24 million or less	480,000
Over 24 million and up to 24.5 million (incl.)	320,000
Over 24.5 million and up to 25 million (incl.)	160,000
Over 24 million	0

(*) For more details, see No.1199 基礎控除｜国税庁 (Japanese only)

Employment Earnings Deduction (給与所得控除)

This is a deduction that is considered to be your potential expenses related to work, calculated based on your income (e.g. salary, bonuses).

The formula for calculating the employment earnings deduction is shown below.

Salary and Other Income (Yen)	Formula or Flat Deduction (Yen)
1,625,000 or less	Flat deduction: 550,000
Over 1,625,000 and up to 1,800,000 (incl.)	Income × 40% − 100,000
Over 1.8 million and up to 3.6 million (incl.)	Income × 30% + 80,000
Over 3.6 million and up to 6.6 million (incl.)	Income × 20% + 440,000
Over 6.6 million and up to 8.5 million (incl.)	Income × 10% + 1.1 million
Over 8.5 million	Flat deduction: 1.95 million (max.)

(*) For more details, see No.1410 給与所得控除｜国税庁 (Japanese only)

Spouse Exemption (配偶者控除)

This deduction can be received if you have a spouse who qualifies. The amount depends on your total earnings.

If your total income is over 10 million yen, you cannot receive this deduction.

To apply for the spouse exemption, you need to fill out the necessary information on the "Application for Basic Exemption of Employment Income Earner and Application for Exemption for Spouse of Employment Income Earner and Application for Exemption of Amount of Income Adjustment" (給与所得者の基礎控除申告書 兼 給与所得者の配偶者控除等申告書 兼 年末調整に係る定額減税のための申告書 兼 所得金額調整控除申告書).

Your Total Earnings (Yen)	Deductible Amount (Yen)
	Spouse Qualifying for Tax Deductions (控除対象配偶者)	Spouse Qualifying for Elderly Deductions (老人控除対象配偶者)
9 million or less	380,000	480,000
Over 9 million and up to 9.5 million (incl.)	260,000	320,000
Over 9.5 million and up to 10 million (incl.)	130,000	160,000

(*) For more details, see No.1191 配偶者控除｜国税庁 (Japanese only).

Special Exemption for Spouses (配偶者特別控除)

Even if you cannot receive the previously mentioned Spouse Exemption (配偶者控除), you may still be able to receive a flat deduction depending on your spouse's earnings.

This is referred to as the “Special Exemption for Spouses” (配偶者特別控除).

The requirements for special exemption for spouses are shown below. (*) Text in bold indicates the requirements that are different from the Spouse Exemption (配偶者控除)

• You (the taxpayer) and your spouse share living expenses
• Your spouse’s annual total earnings exceed 480,000 yen but less or equal to 1.33 million yen
• Your spouse has not received any salary payments as a family employee (事業専従者) of a blue return (青色申告) taxpayer during that year and they are not a family employee (事業専従者) of a white return (白色申告) taxpayer
• Your spouse has not applied the Special Exemption for Spouses

To apply for the Special Exemption for Spouses, you need to fill out the necessary information on the "Application for Basic Exemption of Employment Income Earner and Application for Exemption for Spouse of Employment Income Earner and Application for Exemption of Amount of Income Adjustment" (給与所得者の基礎控除申告書 兼 給与所得者の配偶者控除等申告書 兼 年末調整に係る定額減税のための申告書 兼 所得金額調整控除申告書).

Note that if your total earnings exceed 10 million yen, you cannot receive the Special Exemption for Spouses.

Also note that common-law partners are not considered to be spouses.

Spouse’s Total Earnings (Yen)	Your Total Earnings and Deductions
	9 million or less	Over 9 million and up to 9.5 million (incl.)	Over 9.5 million and up to 10 million (incl.)
Over 480,000 and up to 950,000 (incl.)	380,000	260,000	130,000
Over 950,000 and up to 1,000,000 (incl.)	360,000	240,000	120,000
Over 1 million and up to 1.05 million (incl.)	310,000	210,000	110,000
Over 1.05 million and up to 1.1 million (incl.)	260,000	180,000	90,000
Over 1.1 million and up to 1.15 million (incl.)	210,000	140,000	70,000
Over 1.15 million and up to 1.2 million (incl.)	160,000	110,000	60,000
Over 1.2 million and up to 1.25 million (incl.)	110,000	80,000	40,000
Over 1.25 million and up to 1.30 million (incl.)	60,000	40,000	20,000
Over 1.3 million and up to 1.33 million (incl.)	30,000	20,000	10,000

(*) For more details, see No.1191 配偶者控除｜国税庁 (Japanese only).

Dependent Deduction (扶養控除)

This deduction can be received if you have a dependent relative recognized under Japanese tax law.

Dependent deductions can be declared by listing the required information in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書).

Category		Deductible Amount (Yen)
General dependent relative eligible for deduction (*1)		380,000
Specified dependent relative (*2)		630,000
Elderly dependent relative (*3)	Elderly relative (other than parents) who lives with you	480,000
	Elderly parent or grandparent who lives with you (*4)	580,000

(*1): A relative who qualifies as a dependent and is aged 16 or older as of December 31 of that year.

(*2): A relative who qualifies for dependent deductions and is aged between 19 and 22 (inclusive) as of December 31 of that year.

(*2): A relative who qualifies for dependent deductions and is aged 70 or older as of December 31 of that year.

(*4): An elderly dependent relative who is your or your spouse’s direct ascendant, meaning a parent, grandparent, great-grandparent, etc. (including adoptive), and lives together with you most of the time. Even if this relative has been hospitalized for a long time to receive medical treatment, they are still considered to be living together with you. However, if the elderly relative has moved to a retirement home or similar facility, it no longer counts as living together, because their place of residence is different from yours.

(*) For more details, see No.1180 扶養控除｜国税庁 (Japanese only).

Earnings Amount Adjustment Deduction (所得金額調整控除)

This deduction can be received by both you and your spouse if your annual income exceeds 8.5 million yen and you meet at least one of the following conditions. Even if a dependent or relative sharing living expenses with you is under the care of someone other than you, you can still apply for this deduction.

• You are a person with special disabilities (特別障害者)
• A spouse sharing living expenses with you is a person with special disabilities (特別障害者)
• Your dependent relative is a person with special disabilities (特別障害者)
• Your dependent relative is under 23 years old

To apply for this deduction you need to fill out the necessary information on the "Application for Basic Exemption of Employment Income Earner and Application for Exemption for Spouse of Employment Income Earner and Application for Exemption of Amount of Income Adjustment" (給与所得者の基礎控除申告書 兼 給与所得者の配偶者控除等申告書 兼 年末調整に係る定額減税のための申告書 兼 所得金額調整控除申告書).

Calculation for the Earnings Amount Adjustment Deduction

[Income such as from employment (if over 10 million, then 10 million) − 8.5 million yen] x 10%

(*) For more details, see No.1411 所得金額調整控除｜国税庁 (Japanese only)

Disabilities Deduction (障害者控除)

This deduction can be received by you if you, your spouse, or a dependent family member has a disability.

If the following conditions are met, this can also apply to dependents under 16 years old.

Certificate	Special disabilities (特別障害者)	General disabilities (障害者)
Physical Disability Certificate (身体障害者手帳)	Level 1, Level 2	Levels 3 to 6
Mental Disability Certificate (精神障害者保健福祉手帳)	Level 1	Level 2, Level 3
Medical Rehabilitation Handbook (療育手帳, 愛護手帳, etc.)	A	B
A person who is bedridden	Applicable	ー

Disabilities deduction can be declared by listing the required information in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書)

Category	Deductible Amount (Yen)
Person with general disabilities (障害者)	270,000
Person with special disabilities (特別障害者)	400,000
Person with special disabilities living with you (同居特別障害者) (*)	750,000

(*) This refers to your spouse or dependent family member with a special disability who lives with you, your spouse, or a household member, with whom they also share living expenses.

(*) For more details, see No.1160 障害者控除｜国税庁 (Japanese only).

Working Student Deduction (勤労学生控除)

This deduction can be received when you are attending a school while holding a job (Note: Japanese language schools and similar courses are usually not eligible, but check with your school’s HR department for exact details).

The deduction can be received when all of the following apply as of December 31 of that year:

• You have earnings from working a job, such as employment earnings
• Your total earnings do not exceed 750,000 yen AND your earnings from source other than a job (as mentioned above) do not exceed 100,000 yen
• You are a student at a specific school

Working student deductions can be declared by listing the required information in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書).

Category	Deductible Amount (Yen)
Working Student Deduction (勤労学生控除)	270,000

(*) For more details, see No.1175 勤労学生控除｜国税庁 (Japanese only).

Single Parent Deduction (ひとり親控除)

This deduction can be received if you are raising children by yourself, regardless of your gender and marital status.

The deduction can be received when all of the following apply as of December 31 of that year:

• You are not in a common-law marriage
• You have children with which you are sharing living expenses (*) The child’s total annual earnings for that year must not exceed 480,000 yen, AND they must neither be a spouse sharing living expenses with someone else, nor someone else’s dependent.
• Your total earnings do not exceed 5 million yen

Single parent deductions can be declared by listing the required information in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書).

Category	Deductible Amount (Yen)
Single Parent Deduction (ひとり親控除)	350,000

(*) For more details, see No.1171 ひとり親控除｜国税庁 (Japanese only).

Widow Deduction (寡婦控除)

This deduction can be received if you 1) have not remarried after your husband has passed away, or 2) have not remarried after divorcing your husband, or 3) if it is unclear if your husband is dead or alive.

You can receive this deduction if the following conditions apply as of December 31 of that year.

Important note: Persons in a common-law marriage do not qualify for this deduction!

• You have not remarried since divorcing from your spouse, you have dependent relatives (who are not a spouse or dependent relative sharing the same household income with another person), and your total earnings do not exceed 5 million yen
• You have not remarried after your spouse passed away, or it is unclear if your spouse is dead or alive, and your total earnings do not exceed 5 million yen

Widow deductions can be declared by listing the required information in the "Application for (Change in) Exemption for Dependents of Employment Income Earner" (給与所得者の扶養控除等（異動）申告書).

Category	Deductible Amount (Yen)
Widow Deduction (寡婦控除)	270,000

(*) For more details, see No.1170 寡婦控除｜国税庁 (Japanese only).

Insurance Premium Deductions (保険料控除)

This deduction can be received based on the insurance premiums you paid in that year.

During the year-end adjustment, you can declare four types of insurance premiums: 1) life insurance (生命保険), 2) earthquake insurance (地震保険), 3) social insurance (社会保険), and small business mutual aid (小規模企業共済等掛金).

Life Insurance Premium Deduction (生命保険料控除)

You can receive this deduction for premiums paid on your life insurance plan (生命保険), nursing care insurance plan (介護医療保険), or personal pension insurance plan (個人年金保険).

The maximum total deductible amount for all three is 120,000 yen.

(*) For more details, see No.1140 生命保険料控除｜国税庁 (Japanese only).

Earthquake Insurance Premium Deduction (地震保険料控除)

You can receive this deduction for premiums paid on your earthquake insurance plan (地震保険) and casualty insurance premiums related to certain long-term casualty insurance plans (under certain conditions) (長期損害保険契約等に係る損害保険料).

The maximum deductible amount is 50,000 yen.

(*) For more details, see No.1145 地震保険料控除｜国税庁 (Japanese only).

Social Insurance Premium Deduction (社会保険料控除)

You can deduct the full amount of social insurance premiums paid for yourself, your spouse, or dependents who share your household.

During the year-adjustment process, you do not need to to include information about your social insurance premiums that are deducted from your salary.

(*) For more details, see No.1145 地震保険料控除｜国税庁 (Japanese only).

Small Business Mutual Aid Contribution Deduction (小規模企業共済等掛金控除)

You can deduct the full amount paid for small business mutual aid contributions (小規模企業共済掛金), defined contribution pensions (確定拠出年金), or mutual aid premiums for people supporting depends with physical and intellectual disabilities.

(*) For more details, see No.1135 小規模企業共済等掛金控除｜国税庁 (Japanese only).

Types of Deduction Applications Created via SmartHR’s Year-End Adjustment

Application for (Change in) Exemption for Dependents of Employment Income Earner (給与所得者の扶養控除等（異動）申告書)

This document contains Information about the salary received from your company, which is used to receive the following deductions:

• Dependent Deduction (扶養控除)
• Disabilities Deduction (障害者控除)
• Widow Deduction (寡婦控除)
• Single Parent Deduction (ひとり親控除)
• Working Student Deduction (勤労学生控除)

The name of this application form is very long, so it is sometimes abbreviated to "Marufu" (マルフ) in Japanese.

Application for Basic Exemption of Employment Income Earner and Application for Exemption for Spouse of Employment Income Earner and Application for Exemption of Amount of Income Adjustment (給与所得者の基礎控除申告書 兼 給与所得者の配偶者控除等申告書 兼 年末調整に係る定額減税のための申告書 兼 所得金額調整控除申告書).

This document contains Information about the salary received from your company, which is used to receive the following deductions:

• Basic Deduction (基礎控除)
• Spouse exemption (配偶者控除) or Special exemption for spouses (配偶者特別控除)
  • (*) You cannot claim both deductions at the same time.
• Earnings Amount Adjustment Deduction (所得金額調整控除)

Application for Deduction for Insurance Premiums for Employment Income Earner (給与所得者の保険料控除等申告書)

This document contains Information about the salary received from your company, which is used to receive the following deductions:

• Life Insurance Premium Deduction (生命保険料控除)
• Earthquake Insurance Premium Deduction (地震保険料控除)
• Social Insurance Premium Deduction (社会保険料控除)
• Small Business Mutual Aid Contribution Deduction (小規模企業共済等掛金控除)

You do not need to fill out this application form if you do not have any of the above insurances.

The name of this application form is very long and is sometimes abbreviated to "Maruho" (マルホ) in Japanese.

Application for Special Credit for Loans Related to a Dwelling (Specific Additions or Improvements) for Employment Income Earner (給与所得者の住宅借入金等特別控除申告書)

This form is used to apply for a home loan deduction on the salary you receive from your company.

In the first year of applying for a home loan deduction, you must file a final tax return (確定申告). Do not apply for it through a year-end adjustment.

rom the following year, you can continue to receive the deduction through year-end adjustments.

Other Terminology

Joint Liability (連帯債務)

This refers to a home loan where one person is designated as the main debtor (主債務者) and another person as the joint debtor (連帯債務者).

Example: When buying a property worth 50 million yen

• The husband borrows 50 million yen as the main debtor
• The wife is the joint debtor

For the above case of joint liability, the married couple are both responsible for repaying the loan as debtors, which means that both the husband and the wife can apply for a housing loan deduction.

Meanwhile, if the wife is designated as a "joint guarantor" (連帯保証人), she is not considered to be a joint debtor and so she cannot apply for a housing loan deduction.

Pair Loan (ペアローン)

This refers to a home loan where two people take out the housing loan and are designated as a joint guarantor (連帯保証人) for each other.

Example: When buying a property worth 50 million yen

• The husband and wife each borrow 25 million yen
• They are a joint guarantor for each other

For the above pair loan case, the married couple are both responsible for repaying the loan as debtors, which means that both the husband and the wife can apply for a housing loan deduction.