US Citizens Working in Japan
See what you actually take home after US and Japan taxes — whether you're already working abroad or planning a move.
Here's what matters most for US citizens working in Japan:
- •Japan has progressive income tax rates up to 45%
- •FEIE can exclude up to ~$126,500 from US taxation if you meet the physical presence test
- •Residence tax adds 10% on top of national income tax
- •US-Japan tax treaty helps prevent double taxation
Who taxes you?
As a US citizen working in Japan, you're subject to taxation by both countries. The US taxes citizens on worldwide income, but the Foreign Earned Income Exclusion (FEIE) can exclude up to approximately $126,500 of foreign earned income if you meet the 330-day physical presence test. Japan taxes residents on Japanese-sourced income with progressive rates up to 45%, plus residence tax of 10%. The US-Japan tax treaty provides foreign tax credits to prevent double taxation.
Common pitfalls
- Japanese tax rates are high, with top marginal rate of 45% plus 10% residence tax
- Residence tax adds 10% on top of national income tax
- Not meeting the 330-day physical presence test disqualifies you from FEIE
- State tax obligations may persist if you maintain US state residency
- Cost of living in Japan is very high, especially in major cities
Frequently asked questions
Yes. US citizens must file US tax returns regardless of where they live. However, you may not owe US taxes if your income is below the FEIE threshold and you meet the physical presence test.
The FEIE allows you to exclude up to approximately $126,500 (indexed annually) of foreign earned income from US taxation if you meet either the bona fide residence test or the 330-day physical presence test.
Japan has a progressive income tax system with rates from 5% to 45%, plus residence tax (住民税) of approximately 10% levied by prefectures and municipalities. Combined rates can reach up to 55%. You can claim foreign tax credits on your US return to offset taxes paid to Japan.
Residence tax (住民税) is a local tax in Japan that adds approximately 10% on top of national income tax. It's levied by prefectures and municipalities and applies to residents regardless of nationality.
Generally no. The US-Japan tax treaty and foreign tax credits help prevent double taxation. You'll typically pay the higher of the two tax rates, not both.
Official resources
Primary sources:
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