Why December Pay Is Different in Japan

Last updated: 6 October 2026 · figures for the 2026 tax year (令和8年分)

December’s payslip in Japan looks different because it usually settles the whole year’s income tax: on ¥400,000 a month in Tokyo with nothing extra claimed it hands back ¥45,500. That applies to most employees — anyone who gave this employer the dependents declaration (扶養控除等申告書), still works there at the end of the year and is paid ¥20,000,000 or less by it. Every other month your employer takes income tax (所得税) off by looking your pay up in a national table — an estimate, made without knowing what your year will come to. In December it works out the tax you actually owe on the year’s salary and settles the difference in that month’s pay. That settlement is the year-end adjustment (年末調整, nenmatsu chōsei).

Why the monthly figure was only ever an estimate

The monthly table (月額表) is read with two numbers: your pay after social insurance, and the count on your dependents declaration — a qualifying spouse and dependents, plus extra counts for a disability, a widow, a single parent or a working student. Nothing else about your year. The National Tax Agency’s English guide says the table has already “take[n] into account the amounts equivalent to the deductions for employment income”, so nothing further is worked out month by month. It cannot know about an insurance policy you pay for, a relative who became your dependent in March, or a year that bonuses made bigger than twelve monthly salaries.

So the year is squared up once, at the end. The same guide defines it as the employer settling “the discrepancy… between the total amount of income tax… withheld from each payment of salary… made during the year and the tax amount to be paid for total salary… paid during the year”. For most employees it stands in for filing a return.

What December settles

Take ¥400,000 a month in Tokyo, under 40, no bonus, nobody to declare. The monthly table charges ¥10,750, so ¥129,000 is withheld across the year. What the year owes depends on what else reached the employer by December. (The dependents declaration itself is always in: without it the year is withheld on the higher column otsu (乙欄) instead.)

Life insurance is the ordinary case: ¥80,000 of premiums on a policy written under the current rules is a ¥40,000 deduction, so row two settles ¥47,500. You hand the insurer’s certificate in and the tax follows.

Rows three and four are the same person and the same bill: an ordinary dependent, the ¥380,000 kind rather than a dependent of 19 to 22 or one of 70 or over. Declared in January, the monthly table counts them from the next payslip — ¥2,840 a month less withheld — so by December there is less left to hand back. Declared only at the year-end, the whole ¥19,400 they are worth against income tax arrives at once, as ¥64,900. The bigger refund is not the better outcome: it is the same money, after lending the government ¥34,080 for a year. A dependent living abroad has a test of their own first, and between 30 and 69 it is study abroad, a disability, or the ¥380,000 rule.

Why 2026’s is bigger than usual

A refund of ¥45,500 for somebody who claimed nothing extra is not normal, and 2026 is not a normal year. The 2026 tax reform raises the basic exemption (基礎控除) and the employment income deduction (給与所得控除). It takes effect on 1 December 2026 and applies to income tax for the whole of 2026, and the National Tax Agency is explicit about the payroll of it: withholding up to November 2026 is unchanged. Eleven months were withheld against the old figures; December applies the new ones to all twelve.

When December takes money instead

The settlement runs both ways, and two things commonly turn it into a bill.

• Large bonuses. Tax on a bonus is withheld at a rate read off the previous month’s salary rather than off the year — unless the bonus is more than ten times that salary, both amounts after social insurance, which has a method of its own — so a big bonus after an ordinary month is under-withheld. Two bonuses of ¥1,500,000 on ¥400,000 a month make the year ¥7,800,000, and December collects ¥59,958 — how a Japanese bonus is taxed has the rate table.
• A dependent who stopped counting. You declared them in January, their own income for the year then went over the limit, and the year is recomputed without them.

What you hand in, and by when

Four sheets circulate in November, under the National Tax Agency’s own English names. How to fill them in is not this page’s subject.

• Application for (Change in) Exemption for Dependents of Employment Income Earner (扶養控除等（異動）申告書): the one that drives the monthly table.
• Applications for Basic Exemption, Exemption for Spouse, Special Exemption for Specified Relatives and Exemption of Amount of Income Adjustment (基礎控除申告書 兼 配偶者控除等申告書 兼 特定親族特別控除申告書 兼 所得金額調整控除申告書), all on one sheet.
• Application for Deduction for Insurance Premiums (保険料控除申告書), with the insurers’ certificates.
• Application for Special Credit for Loans, etc. Related to a Dwelling (住宅借入金等特別控除申告書).

The three year-end sheets are due by the day before the last salary payment of the year. The dependents declaration is the odd one out: it goes in before the year’s first payday, and again whenever something changes. Medical expenses need a return of your own, and so do hometown-tax donations (ふるさと納税) unless their one-stop exception applies.

What this page does not do

YenTake does not compute your refund from your circumstances: there is no field for life insurance, iDeCo, a home-loan credit or medical expenses, so row two came from the published deduction table the engine already carries rather than from the form. What it does show, month by month, is the year-end adjustment line for the salary you enter.

Above ¥20,000,000 of salary from one employer there is no year-end adjustment at all: that year is settled by a final tax return (確定申告), months later. Resident tax (住民税) takes no part in any of it — charged on the year before and collected from June, it does not move in December. Your first year is where that shows.

December 2026 carries one more thing: the larger basic exemption for 2026 took effect only on 1 December, so the month’s adjustment gives all of it back at once — how the 2026 basic deduction change affects your take-home.

Questions people ask

When do I actually get it?

In the pay that carries it, usually December’s. The rule is the last salary payment made in the year, whichever month’s work it covers, so a company that pays a month in arrears still settles on its December payday. Somebody posted abroad who stops being a resident, or who dies during the year, has theirs done at that point instead.

I joined in the middle of the year. Do I still get one?

Yes, if you are there for the last payment. Give the new employer the withholding tax statement (源泉徴収票) from the old one and they settle both jobs together. Leave during the year and join nowhere and, a few narrow cases aside, nobody does it for you: the withholding stays an estimate until you file.

My colleague earns the same and got more back. Why?

Because a refund measures the gap between what was taken and what was owed, not what was owed. Rows three and four above are one person’s year written two ways: declare late, or have a deduction the monthly table never sees, and December is bigger while the year is the same.

This is a general explanation and an estimate, not advice about your situation. What your employer’s payroll accepts, and how your own year is treated, is a question for them and for a 税理士 (licensed tax accountant).

Sources

• National Tax Agency — Withholding Tax Guide 2026 (chapter VII defines the procedure and its timing; the monthly-table passage and the form names are its own words). English, PDF.
• National Tax Agency — No.2662 年末調整のしかた (that a year’s withholding “does not necessarily match” the tax owed, and that reconciling the two is what the procedure is for). Japanese.
• National Tax Agency — No.2665 年末調整の対象となる人 (who is covered, and the salary ceiling above which it stops). Japanese.
• National Tax Agency — 令和8年度税制改正による所得税の基礎控除の引上げ等について (in force 令和8年12月1日 and applying to 令和8年分 onwards; withholding through November 2026 unchanged, December’s year-end adjustment not). Japanese.
• National Tax Agency — No.1140 生命保険料控除 (the table that turns a current-rules premium into a deduction). Japanese.
• National Tax Agency — 令和8年分 源泉徴収税額表 (the monthly table the withholding is read from, and the bonus rate table). Japanese.

See your own December line