Income Tax Exemptions

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Taxpayers with dependents or individuals with certain circumstances may, in some cases, be eligible for tax exemptions. The following exemptions may be deducted from a taxpayer’s total annual income.

◆Basic Deduction – in general, all taxpayers receive an exemption of 380,000 Yen.

Social Insurance Deductions for individuals and/ or their dependent’s social insurance payments (including health, pension, nursing, and employment insurance); it does not include payments for overseas insurance plans.

Life Insurance and Personal Pension Deduction for payments made by the individual to private insurance companies.

Fire & Other Casualty Insurance Deduction for insurance paid for loss of property (residential, household effects and assets).

Deduction for Donations made to national or public corporations as well as specified contributions.

Spousal Deductions if a spouse’s total yearly income is less than 380,000 Yen and their livelihood is dependent upon the taxpayer.

Special Spousal Exemptions for spouses whose income surpassed 380,000 Yen, but was less than 760,000 Yen.

Deductions for Dependents are for dependents other than spouses who are dependent on the taxpayer for their livelihood and whose total yearly income is less than 380,000 Yen; may deduct up to 980,000 Yen depending on their age and physical condition.

Disability Deductions are for a physically or mentally handicapped taxpayer, dependent spouse, or family member.

Deductions for Widows, Widowers and Divorcees who have not re-married; additional requirements may have to be met.

Exemptions for Medical Expenses - Individuals who have high medical bills may receive a refund for a portion of their taxes. Medical expenses subject to deduction are:

  1. fees paid for medical or dental visits and treatment including transportation fees to and from the place of treatment
  2. fees for medicine, fees for acupuncture, moxibustion, and massage
  3. fees paid to a midwife for assistance in childbirth. All related receipts need to be submitted when claiming this exemption. Only expenses incurred during the current fiscal year are eligible for exemption. Expenses resulting from cosmetic surgery, physical examinations, and medical supplements are not eligible for exemption.

The deductible amount for medical expenses (up to a maximum of 2 million Yen) is equal to: “Amount paid” minus “Amount covered by insurance benefits” minus “100,000 Yen or 5% of one’s gross earnings, whichever figure is smaller”.

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