Balancing Work and Dependence in Japan
In Japan, it’s common for high-income earners to have spouses who are homemakers or considering part-time jobs. But before the spouse steps into the workforce, it’s essential to understand how even a small income can affect your household’s taxes and social insurance. Let’s break down what you need to know in simple terms.
When Is a Spouse Considered a Dependent?
A spouse is considered a dependent when:
- They do not work at all, or
- They earn less than certain limits and are still covered by the main income earner’s tax and insurance benefits.
There are two types of dependencies:
- Tax Dependent – The main taxpayer gets a tax deduction.
- Social Insurance Dependent – The spouse doesn’t need to pay health, pension, or other insurance.
The key threshold is an income of ¥1,080,000 per year. Earning below this means no tax or social insurance needs to be paid by the spouse.
Tax ‘Walls’ – When Taxes Begin
There are two major tax limits (often called “walls” in Japanese):
- Resident Tax Wall – Income over ¥1,080,000 starts attracting resident tax.
- Income Tax Wall – Income over ¥1,600,000 starts attracting income tax.
These numbers are calculated after applying two deductions:
- Employment income deduction: ¥650,000
- Basic exemption: varies, currently around ¥950,000 (under discussion)
Social Insurance ‘Wall’ – When Deductions Begin
Your spouse starts paying into Japan’s pension and health systems when:
- They work in a company with 51 or more employees, and
- Earn over ¥88,000 per month (or ¥1,060,000 per year)
Once the income crosses this wall, social insurance becomes mandatory and can reduce take-home pay significantly.
The Big Picture: How More Income Affects Take-Home and Household Benefits
As income goes up, more deductions kick in, and dependency benefits for the main taxpayer reduce:
- Below ¥1,060,000: No taxes or insurance, full benefits remain.
- ¥1,080,000–¥1,299,999: Resident tax and insurance begin.
- ¥1,300,000+: Full insurance applies, and spouse is no longer considered a dependent.
- ¥1,500,000+: Taxpayer’s deductions start to reduce.
- ¥2,016,000+: No dependent deduction remains for the taxpayer.
This is important because sometimes, earning more doesn’t mean taking more home due to the steep drop in tax benefits.
FAQs
Q1: Should my spouse avoid earning more than ¥1,060,000 to stay a dependent?
If keeping full tax and insurance benefits is a priority, yes. However, if your spouse’s income potential beyond that point is significantly higher, it might be worth it to accept the deductions and work more.
Q2: Do these limits change often?
Yes. As of March 2025, some limits like the basic exemption are under review and could shift in future years. It’s important to stay updated or consult a tax advisor yearly.
Conclusion
Understanding these “income walls” helps families in Japan make smarter decisions. Whether it’s staying under the threshold or planning to cross it with intention, knowing the financial impact can protect your household income.
Disclaimer:
- I am not a tax, investment or real estate advisor.
- Consult with a professional for your situation to get accurate/specific advice
- Use this material only for gaining knowledge
- For ease of understanding, I have simplified as required
- Uncopyrighted / To share with those in need
