Individual income tax in Japan consists of national income tax（所得税） and local inhabitant tax（住民税）. Inhabitant tax is assessed by the prefectural and municipal governments.
Ordinary income consists of the following:
- interest income（利子所得）
- dividend income（配当所得）
- real estate income（不動産所得）
- business income（事業所得）
- employment income（給与所得）
- miscellaneous income（雑所得）
- occasional income（一時所得）
- capital gains other than capital gains derived from real estate and securities(譲渡所得？)
Income tax is levied at progressive rates, from 5% to 40%.
Inhabitant taxes are levied by prefectural governments and municipal governments in Japan. The prefectural inhabitant tax is levied at a flat rate of 4% and the municipal inhabitant tax is levied at a flat rate of 6%.
A nonresident is not subject to inhabitant income taxes.
The following allowable deductions can be deducted from taxable income（所得） to reduce income tax and inhabitant tax liability. Reliefs are separately applied to each individual taxpayer.
- Basic deduction（基礎控除）
- Spouse（一般配偶者控除）
- Spouse, 70 years or older（老人配偶者控除）
- Dependent（扶養控除）