Side Income in Japan: The ¥200,000 Rule for Employees
The ¥200,000 rule lets some employees skip the final tax return (kakutei shinkoku). It has three conditions. One employer must withhold tax on all your pay. Your gross salary must be ¥20 million or less. Your other income after expenses must be ¥200,000 or less.
The rule covers national income tax only. You generally still report that income for resident tax (juminzei). If you file a return for any reason, you must include it.
The rule applies only if you meet every condition
The ¥200,000 rule applies only if all three conditions below are true. This guide is for residents of Japan. See your tax status in Japan if you are unsure.
- One employer. One employer pays you and withholds tax on all your pay. That employer usually also does your year-end adjustment (nenmatsu chosei).
- Gross salary of ¥20 million or less. Above that, you generally must file, with or without side income.
- Other income of ¥200,000 or less. This is your total for the year after expenses. It leaves out salary and retirement income.
You also have no duty to file if your income after deductions produces no tax, or if filing would give you a refund. The National Tax Agency (NTA) lists other cases where you must file. One example is a director of a family company, or the director's relative, who receives rent or interest from that company.
The rule does not cover pay from a payer with no Japanese withholding duty, which can include a foreign company paying you abroad. You then generally must file. See our RSU page for stock pay from a foreign parent company.
If your second job pays a salary
A second job paid as salary is not side income, so a different test applies. If your employers withhold tax on all your pay, add the salary with no year-end adjustment to your other income. If the total is over ¥200,000, you generally must file.
This test uses your gross pay from that job. There is one exception. You do not need to file if your other income is ¥200,000 or less and your total salary is ¥1.5 million or less after deductions. For this test, do not count the basic, medical expense, donation and casualty loss deductions.
The test uses income, not sales
Compare ¥200,000 with your income, which means your sales minus your necessary expenses.
| Side job | Anna | Ben |
|---|---|---|
| Sales | ¥350,000 | ¥250,000 |
| Expenses | −¥180,000 | −¥30,000 |
| Income | ¥170,000 | ¥220,000 |
| Against ¥200,000 | Under | Over |
In this example, both meet the other two conditions and have no other income. Anna does not need to file. Ben must file, unless he would owe no tax or filing would give him a refund.
For tax year 2026 (Reiwa 8), Ben generally files from February 16 to March 15, 2027, and pays by March 15, 2027.
The NTA's examples of side income include tutoring, babysitting, online sales, crypto-asset sales and private lodging (minpaku). Convert foreign payments into yen first (see our freelancer guide).
Some items do not count, such as bank interest taxed only by withholding. Listed-share dividends and gains in a withholding-type specified account (tokutei koza) do not count if you choose not to report them. Income from overseas accounts may count, so check it first.
Resident tax has no ¥200,000 rule
The ¥200,000 rule is for national income tax only, and resident tax has no such rule. Your side income is added to your other income for resident tax the next year.
For example, Minato City in Tokyo says a side writing fee of about ¥150,000 must be reported, whatever the amount. If you skip the final return, you generally report the income by March 15 of the next year. Use the city or ward office where you live on January 1 of that year. The steps differ by city, so check its website.
If you do file a final return, you do not need a separate resident tax report. The information goes to your city.
If you file a return, you must include all of it
The ¥200,000 rule only says when you do not need to file. It does not let you choose which income to report. If you file to claim the medical expense deduction or another refund, you must include your side income, even if it is ¥200,000 or less.
Suppose Anna files to claim the medical expense deduction, and her top income tax rate is 20%. Her ¥170,000 of side income adds ¥34,714 to her national tax.
| Step | Amount |
|---|---|
| Side income | ¥170,000 |
| Income tax: ¥170,000 × 20% | ¥34,000 |
| Special income tax for reconstruction: ¥34,000 × 2.1% | ¥714 |
| Added national tax | ¥34,714 |
This is only an estimate, based on these assumptions: all ¥170,000 falls in the 20% band, and no tax was withheld from it. It covers national income tax for tax year 2026 only. Resident tax is separate.
If the added tax is more than her refund, Anna would pay instead. So she should estimate both before she files. If she decides not to file, she still generally reports the income for resident tax.
Business or miscellaneous income: why the label matters
A loss from miscellaneous income (zatsu shotoku) cannot reduce your salary income. A loss from business income (jigyo shotoku) generally can. The NTA gives side-job income, such as writing fees, as an example of miscellaneous income.
Choose the label that fits your real activity. If you claim business income only to offset a loss and the tax office (zeimusho) disagrees, you may face penalties and interest.
If you do side work regularly for profit, record-keeping rules can also apply. They depend on whether your sales two years earlier were over ¥3 million or ¥10 million.
Common mistakes
- Counting each job separately. The ¥200,000 is one total for all your other income, including rent. It is not a limit for each job.
- Leaving out overseas clients. Residents generally report income from Japan and abroad. A non-permanent resident (a tax status, not a visa) has a narrower rule, but fees for work done in Japan are generally not foreign income.
- Waiting because the amount is small. If you had to file and did not, file as soon as you can. If you file on your own before any audit notice, the late-filing penalty is 5% of the tax due. After a notice, it generally rises to 10% to 30%. Late-payment interest is added in both cases. Filing on your own within one month of the deadline can avoid the penalty, if you meet conditions such as paying on time.
What you can do yourself, and where you need help
You can check the rule and collect your records yourself.
- List your side sales and expenses for the year, in yen.
- Save your invoices, receipts and payment records.
- If you do not file, ask your city or ward office how to report.
You may be able to file yourself if you have one side job, clear expenses and few transactions. You need help when the answer depends on your facts. Examples are your income type, a side-job loss, sales near ¥3 million or ¥10 million, invoice registration, and past years you did not file.
What changes when a tax accountant handles it
A tax accountant turns your records into a filed return. Komatsu CPA & Tax Accounting Office helps individuals only, with Japanese tax only, and offers no calls. Our service runs by email in written English. Once you engage us, we do this work:
- Confirm your tax status and income type in writing.
- Work out your side income in yen from your records.
- Combine your salary, side income and deductions, and check the tax withheld.
- Prepare the Japanese return and send an English summary for your approval.
- Sign and file the return, then send you the filed copy.
With our English-language service, Anna's fee would be ¥108,000 (¥118,800 including tax). That is ¥48,000 base + ¥9,000 salary + ¥33,000 side income + ¥9,000 standard deductions + ¥9,000 medical expense deduction. This is only an estimate, based on the assumptions shown. Our minimum fee is ¥97,500 (¥107,250 including tax).
Frequently asked questions
Is the ¥200,000 based on sales or income?
It is based on income, which means your sales minus your necessary expenses. If your sales are over ¥200,000 but your income is not, the rule can still apply.
If I do not need an income tax return, can I skip resident tax too?
Generally no. The ¥200,000 rule is for national income tax only. Resident tax has no such rule, so you generally report the income to your city or ward office.
Do I include side income of ¥200,000 or less in a refund return?
Yes. If you file, for example to claim the medical expense deduction, you must include it. You cannot leave it out because it is ¥200,000 or less. This can make your refund smaller, or mean you have to pay.
Do I report sales on a flea market app?
Sales of used items from your daily life, such as old clothes or furniture, are generally not taxed and need no return. Precious metals, jewels, art and antiques worth over ¥300,000 per item or set can be taxed. Income from buying goods to resell for profit is taxed, generally as miscellaneous or business income.
Does my visa allow side work?
That is an immigration question, not a tax question, and we do not advise on it. Please ask the Immigration Services Agency or an immigration specialist. Late or missing tax returns can matter in visa reviews, as our visa guide explains.
Not sure whether the ¥200,000 rule covers you?
Yuma Komatsu is a Japanese CPA and licensed tax accountant. We prepare, sign and file your return. We work by email in written English. Our tax accountant does not speak English, and we do not offer calls.
Sources
- NTA: 2025 Income Tax and Special Income Tax for Reconstruction Guide, pages 11 and 53
- NTA Tax Answer No.1900 (in Japanese): employees who must file
- NTA Tax Answer No.1900 Q&A (in Japanese): refund returns and income of ¥200,000 or less
- NTA Tax Answer No.1906 (in Japanese): side income of employees
- NTA Tax Answer No.1500 (in Japanese): miscellaneous income
- NTA Tax Answer No.2250 (in Japanese): offsetting losses
- NTA Tax Answer No.2020 (in Japanese): final tax return
- NTA Tax Answer No.2030 (in Japanese): refund returns
- NTA Tax Answer No.2024 (in Japanese): if you forgot to file
- NTA Tax Answer No.2260 (in Japanese): income tax rates
- NTA Tax Answer No.2010 (in Japanese): who is taxed on what income
- NTA Tax Answer No.3105 (in Japanese): assets covered by capital gains rules
- NTA (in Japanese): main national tax due dates
- Minato City (in Japanese): resident tax on a side writing fee of about ¥150,000
- Minato City (in Japanese): who must report for resident tax
- Income Tax Act, Articles 7, 35, 69, 95, 120, 121, 122 and 183 (Japanese)
- Local Tax Act, Articles 45-2, 45-3, 317-2 and 317-3 (Japanese)
This article is general information based on rules in force as of November 7, 2026. It is not advice for your situation.