Japan Retirement Allowance Tax Calculator
Enter your severance (retirement allowance) and years of service. The tool applies the retirement income deduction, half taxation, separate-taxation income tax (including the reconstruction surtax), and 10% resident tax, then shows an estimated net amount. It also handles the short-term rules (five years or less), the officer exception, and the disability addition. This is a rough estimate based on the 2025 rules, not legal or tax advice. For regular monthly pay, use the Salary Take-Home Pay Calculator.
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These results are rough estimates based on the 2025 rules and are not legal or tax advice. The actual tax depends on whether you file the retirement income declaration form, how service periods are combined and other factors. Please confirm with your employer, the tax office and your local government.
Retirement allowance and service period
Enter the period from hire to retirement. A partial year is rounded up (for example, 10 years 1 month counts as 11 years).
If the service period as such an officer is five years or less, half taxation does not apply. For ordinary employees with five years or less, half taxation applies only to the first ¥3 million after the deduction.
Notes
- This is an estimate based on the 2025 rules. The deduction is ¥400,000 per year of service for 20 years or less (minimum ¥800,000), and ¥8 million plus ¥700,000 per year beyond 20 years. A disability retirement adds ¥1 million. Tax reform can change these figures.
- Half of the allowance after the deduction becomes taxable retirement income (rounded down to ¥1,000). It is taxed separately from other income using the standard income tax brackets, and 2.1% of the income tax is added as the reconstruction surtax.
- For ordinary employees with five years of service or less (short-term allowance), half taxation does not apply to the part above ¥3 million after the deduction. For officers with five years or less in that role, half taxation does not apply at all.
- Resident tax is estimated at 10% of taxable retirement income (4% prefectural, 6% municipal). Differences between municipalities and rounding can shift the amount by a few hundred yen.
- If you have not given your employer the retirement income declaration form, a flat 20.42% is withheld from the allowance and settled through a tax return. This tool shows the tax when the form has been submitted.
- Not covered: the overlapping-service adjustment when you received another allowance within the previous four years (19 for officers), allowances paid as a pension, and special cases such as lump sums from defined contribution or corporate pension plans.
- Other income and social insurance are not included. Actual withholding follows your employer’s payroll, so check the retirement income withholding slip. This is not legal or tax advice.
Glossary
Retirement income deduction
A deduction that reduces the tax on a retirement allowance. It grows with years of service: ¥400,000 per year for 20 years or less (minimum ¥800,000) and ¥700,000 per year beyond that.
Half taxation
Only half of the allowance after the retirement income deduction is taxed. It is restricted for short-term allowances and for officers with five years of service or less.
Separate taxation
Retirement income is taxed on its own and not added to salary or other income, so having a salary in the same year does not push the tax rate up.
Short-term retirement allowance
An allowance received after five years of service or less. From 2022, half taxation no longer applies to the part above ¥3 million after the deduction.
Reconstruction surtax
A 2.1% surtax on income tax that funds reconstruction after the Great East Japan Earthquake. It is withheld together with income tax on retirement allowances.
FAQ
How much tax on a ¥20 million allowance after 30 years?
The retirement income deduction is ¥15 million, so half of the remaining ¥5 million (¥2.5 million) is taxed. Income tax with the reconstruction surtax is about ¥156,000 and resident tax about ¥250,000, roughly ¥406,000 in total.
How is the retirement income deduction calculated?
For 20 years or less it is ¥400,000 times the years of service (at least ¥800,000). Each year beyond 20 adds ¥700,000. For 30 years that is ¥8 million plus ¥7 million, or ¥15 million. A disability retirement adds ¥1 million.
How are partial years of service handled?
A partial year is rounded up. Ten years and one month counts as 11 years for the deduction. This tool rounds up automatically when you enter years and months.
Why is the tax higher after five years or less of service?
Since 2022, ordinary employees with five years or less get no half taxation on the part above ¥3 million after the deduction. For officers with five years or less in that role, half taxation does not apply at all, so the tax burden is heavier.
What if I did not submit the declaration form?
Without the retirement income declaration form, your employer withholds a flat 20.42% from the allowance. Filing a tax return then applies the deduction and refunds any excess. This tool shows the tax when the form has been submitted.
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