Japanese Bonus Explained — for Foreign Workers

What is shoyo?

Most Japanese employers pay a summer bonus (June or July) and a winter bonus (December). Together they often equal 3–6 months of base salary. The bonus is contractual at most large companies, discretionary at smaller ones.

Shoyo is treated as ordinary employment income for tax — but the way it is withheld is a little different from monthly salary, which is why your bonus take-home rate often surprises new foreign workers.

What gets deducted

• Health insurance — 4.925% (employee share, Kyokai Kenpo Tokyo FY2026). Annual cap: 5.73M JPY of cumulative standard bonus per fiscal year.
• Long-term care insurance — 0.81%, only if you are aged 40–64.
• Welfare Pension — 9.15%, capped at 1.5M JPY of standard bonus per single payment.
• Employment insurance — 0.5% (general industries, employee share). No cap.
• Withholding income tax — a rate from the official table based on your previous month’s salary minus social insurance.
• Reconstruction surtax — income tax × 2.1%.

See the bonus take-home calculator for a personalised breakdown.

Why resident tax is NOT deducted from your bonus

Resident tax (juminzei, 住民税) is calculated on the previous calendar year’s income and collected over 12 months — June of the following year through May of the year after. There is no resident tax surcharge on bonuses.

However, your bonus does increase next year’s resident tax: the more you earn this year, the higher the monthly resident tax bill from next June. New arrivals often miss this because resident tax doesn’t kick in for the first year of work in Japan.

Year-end adjustment and your bonus

The withholding tax on bonuses is just an estimate. The final annual income tax is settled at nenmatsu chosei (年末調整, year-end adjustment) by your employer in December — or via kakutei shinkoku (確定申告, tax return) if you have multiple income sources or claim deductions like medical expenses.

If you submitted life insurance premium certificates, iDeCo certificates, or a spouse deduction form, those deductions are applied at year-end and you typically get a refund on your December payslip.

Special cases for foreign workers

• First-year arrivals: no resident tax this year, so your bonus take-home rate looks even better. The shock arrives next June.
• Leaving Japan after the bonus: most companies require you to be on payroll on the payment date. Confirm separation timing with HR before resigning.
• Pension contributions on bonus: refundable later via the Lump-Sum Withdrawal if you leave Japan permanently.
• Sending bonus money home: see the remittance tax checker for cross-border tax implications.
• Departing during the year: Departure Tax may apply if you have JPY 100M+ in financial assets.

Smart ways to use your bonus

1. Top up NISA for tax-free investing (up to 3.6M JPY/year)
2. Make a year-lump iDeCo contribution to maximise the tax deduction
3. Use Furusato Nozei to recover up to ~30% in goods on donations to Japanese municipalities
4. Build a 6-month emergency fund before investing