Retiring in Japan
Japan: the tax picture for FIRE
Japan taxes inheritances on the recipient rather than the estate. Under the sozoku-zei system, the total estate less a basic exemption — ¥30,000,000 plus ¥6,000,000 per statutory heir — is notionally split between heirs by their statutory shares, a 10–55% rate schedule is applied to each share, and the resulting tax is then reallocated according to what each heir actually acquires. A spouse benefits from a credit exempting the greater of ¥160,000,000 or their statutory share. Japan's 20% surtax on heirs other than a spouse, child or parent is not included in Ember's modelled rates.
On income, Ember models Japan's national progressive scale (5–45%) with the 2.1% reconstruction surtax and the near-universal ~10% local inhabitants tax combined into one schedule, using the permanent ¥620,000 basic deduction from the FY2026 reform. Gains and dividends on listed securities are modelled at Japan's flat 20.315%. Japan's state pension (kokumin/kōsei nenkin) is modelled with its 60–75 claim window, and under the 2006 UK–Japan treaty, UK private, occupational and State Pensions are taxed only where you live — Japan, not the UK. On day-to-day costs, Ember carries an illustrative cost-of-living factor of 0.70 for Japan at medium confidence. One honest gap to know about: Japan's public-pension deduction — which shelters at least ¥1.1 million of pension income for over-65s — is not yet modelled, so Ember's Japanese tax on pension income errs on the high side.
Income tax (2026)medium confidence
Tax-free allowance: JP¥620,000 (then bands apply to income above it).
| Band (above allowance) | Rate |
|---|---|
| JP¥0 – JP¥1,950,000 | 15.1% |
| JP¥1,950,000 – JP¥3,300,000 | 20.2% |
| JP¥3,300,000 – JP¥6,950,000 | 30.4% |
| JP¥6,950,000 – JP¥9,000,000 | 33.5% |
| JP¥9,000,000 – JP¥18,000,000 | 43.7% |
| JP¥18,000,000 – JP¥40,000,000 | 50.8% |
| above JP¥40,000,000 | 55.9% |
What this model doesn’t capture (11)
- inhabitants tax (住民税) folded into the band rates at a flat 10% — its own smaller basic deduction (¥430,000 vs the ¥620,000 modelled), the ~¥5,000 per-capita levy (incl. forest environment tax) and its prior-year assessment timing are not modelled (net effect ≈ ±¥25k/yr)
- basic deduction modelled at the permanent ¥620,000 (FY2026 reform base) — the temporary 2026–2027 top-ups (up to ¥1,040,000 below ¥4.89M total income) are NOT applied (conservative over-statement ≤ ~¥63k/yr through 2027), and the high-income taper (¥480k→¥320k→¥160k→0 above ¥23.5M total income) is not applied (under-states only above ¥23.5M)
- 公的年金等控除 modelled for state/government-service pensions (rental/pension honesty slice, 2026-07-20) with the standard 'other income ≤ ¥10M' table — the higher-other-income variants (minimum drops to ¥1.0M/¥0.9M) are not modelled; qualified CORPORATE plan annuities (also 公的年金等) are indistinguishable from private annuities in this model and stay undeducted (over-taxed — conservative); survivor pensions (遺族年金) are tax-exempt in Japan but are taxed like ordinary pension income here (conservative)
- employment-income deduction (給与所得控除, 2026 floor ¥690,000) not modelled (retiree-focused pack — salaried users are over-taxed by the missing deduction)
- social-insurance premiums (national health, long-term care, nenkin) are separate levies, not modelled; their income-deductibility (社会保険料控除) is also not modelled (small conservative bias)
- spouse/dependant deductions, the dividend aggregate-taxation option with 配当控除, and furusato nozei not modelled
- corporation tax not modelled (JP national 23.2% + local enterprise taxes)
- selfEmployment: no regime module — self-employed national health/pension quotas and the blue-return deduction are not modelled
- exit tax (国外転出時課税 — deemed-disposal on ≥¥100M financial assets when leaving after 5+ resident years) not modelled
- from 2027 the 2.1% reconstruction surtax re-splits into 1.1% reconstruction + 1.0% defence surtax — the combined burden is unchanged, so ×1.021 stays correct
- FY2026-reform figures rest on the 26 Dec 2025 大綱 as implemented by the NTA (施行 1 Dec 2026); re-verify the final enacted text at next review
Capital gainshigh confidence
Capital gains are taxed at a flat 20.3%.
20.315% flat on listed securities (15% national + 0.315% reconstruction surtax + 5% inhabitants), separate self-assessment (申告分離課税); unlisted shares same rate in a ring-fenced pool (no cross-offset). Real estate differs: 39.63% held ≤5yrs / 20.315% >5yrs measured to 1 Jan of sale year — not modelled. NISA tax-free wrappers not modelled.
Inheritance & estate taxmedium confidence
Tax is charged on each recipient, scaled by their relationship to the deceased.
Recipient-side sozoku-zei. Mechanics: total estate less the basic exemption (¥30,000,000 + ¥6,000,000 per statutory heir), notionally split by statutory shares, the 10–55% schedule applied per share, then reallocated by actual acquisition. Per-class bands encode the NTA schedule (identical across classes). Spouse: a credit exempts the greater of ¥160,000,000 or the statutory share, so spouseExempt=true with the ¥160M floor. allowanceMinor encodes the ¥6M per-statutory-heir component (the ¥30M base is estate-level — the engine must add it in P2/P3). A 20% surtax on non-spouse/child/parent heirs is NOT in these rates.
When should you claim your Japan state pension?high confidence
Japan National + Employees' Pension (kokumin/kōsei nenkin)
Normal pension age 65. Deferring adds 0.7% per month (≈8.4%/yr) to age 75. Claiming early from 60 cuts it by 0.4% per month.
Two-part system: flat basic pension (kokumin nenkin — FY2026 full ¥847,300/yr, pro-rated by contribution months/480) plus earnings-related kōsei nenkin (enter your nenkin-net forecast as the amount). Indexed annually (macroeconomic slide). Payable abroad without freezing. Old-age pension income is taxable (雑所得 after the public-pension deduction — the JP tax pack over-taxes it, see its caveats); survivor pensions are tax-exempt.
The best age to claim isn’t just about these factors — it depends on your life expectancy, your other income, and which country you’re tax-resident in when the money lands. Deferring into a lower-tax country can flip the answer entirely. Optimise your claim age →
Cost of living
70%
of a UK baseline (100%) — a rough, illustrative comparison, not a forecast.
UK private pension
Under the UK treaty, a UK-sourced private pension paid to a resident here is generally taxed only where you live (not by the UK).
Common questions
Is there inheritance tax in Japan?
Yes. Japan levies sozoku-zei on the recipient rather than the estate: after a basic exemption of ¥30,000,000 plus ¥6,000,000 per statutory heir, the estate is notionally split by statutory shares, taxed on a 10–55% schedule, and the tax is reallocated by what each heir actually receives. A spouse is effectively exempt up to the greater of ¥160,000,000 or their statutory share. Ember models this at medium confidence, and the 20% surtax on heirs other than a spouse, child or parent is not included in the modelled rates.
How does Ember treat the cost of living in Japan?
Ember applies an illustrative cost-of-living factor of 0.70 to Japan, where 1.0 represents the baseline, so modelled living costs come out well below that baseline. The figure carries medium confidence — treat it as a planning input rather than a precise measure of Japanese prices.
Will my UK pension be taxed in Japan?
Under the 2006 UK–Japan double tax convention (Article 17), UK private, occupational and State Pensions paid to a Japan resident are taxable only in Japan — the UK gives full relief. Ember models this, applying Japanese income tax to the pension income. One honesty note: Japan's public-pension deduction is not yet modelled, so the Japanese tax Ember shows on pension income errs on the high side. Government-service pensions are the exception — they generally stay taxed in the UK.
What does Japan do to your FIRE date?
The free calculator compares your number across every covered country; the full planner models your actual accounts, pensions, residency moves and these exact tax rules — with the maths behind every figure shown.