The Easiest Tax Wins in Your First Years in Japan

Quick Answer: Two tax wins are available in your first year in Japan: the medical expense deduction (if your household spent over ~¥100,000 on medical care) and the overseas dependent deduction (if you support family abroad — often claimable through year-end adjustment). Furusato Nozei — donate, get a local gift, and cut your resident tax for a net cost of ~¥2,000 — usually starts in your second year, once you're paying resident tax. Know which applies when, and claim it.

Japan's tax system quietly rewards people who know where to look — and most foreigners never claim what they're owed simply because no one explained it. This guide rounds up the easiest wins for newcomers and, importantly, gets the timing right: some you can use immediately, and one big one only kicks in once you're paying resident tax.

This is educational information, not tax advice. Rules and thresholds change and depend on your situation — confirm with the NTA, your municipality, or a qualified tax professional (税理士).

Part of our First Year in Japan: Money Starter Kit — the 30/60/90-day path for newcomers.

What tax wins can you actually use in your first year?

Two, if they apply to you:

1. The medical expense deduction (医療費控除). If your household's medical costs for the calendar year exceed about ¥100,000 (or 5% of income if you earn under ¥2M), you can deduct the excess — doctor visits, hospital stays, prescriptions, even qualifying transport. You claim it yourself by filing a return; your employer's year-end adjustment doesn't cover it. Full details in the medical expense deduction guide.

2. The overseas dependent deduction (国外扶養控除). If you financially support relatives living abroad — parents, children — you may be able to claim them as dependents and cut both your income and resident tax (¥380,000 per dependent, more for elderly parents). This one can often be claimed through your employer's year-end adjustment, so it's genuinely usable in year one. See the overseas dependent deduction guide for the documents you'll need.

Neither is automatic — you have to claim them. That's the whole game.

Why is Furusato Nozei usually a year-two win?

Because Furusato Nozei reduces your resident tax, and in your first calendar year in Japan you usually don't pay any — resident tax is charged on your prior year's income, and last year you weren't a Japan resident.

So there's nothing yet for a donation to offset. Donating in year one, before you owe resident tax, means paying full price with no credit back — the opposite of the point. In practice, most foreign employees become eligible from their second year, once resident tax appears on their payslip (see your payslip, decoded for why that lag exists). Bookmark it now; use it then.

How does Furusato Nozei actually work once you're eligible?

The mechanics, in plain terms:

How do you make sure you actually claim these?

The single most common way foreigners lose these wins is by assuming someone else handles them. Here's the split:

Before any of this, make sure your set-up admin is done and you've put your surplus to work in a NISA — the tax you save here compounds fastest when it's invested.

How this fits your bigger plan

None of these wins is transformative alone, but together they lift your savings rate — the single biggest lever on how fast you reach financial independence. Every yen you keep from tax is a yen you can invest. Estimate your take-home with the Japan Tax Calculator, size your Furusato cap with the Furusato Nozei Simulator, and map your timeline with the PlanTogetherFI calculator.

PlanTogetherFI is for educational planning only. It is not financial, tax, or legal advice. Thresholds, caps, and rules vary by income, household, and year and change over time — confirm your situation with the NTA, your municipality, or a qualified tax professional.

Frequently Asked Questions

What tax deductions can I claim in my first year in Japan?

Mainly the medical expense deduction (if household medical costs top ~¥100,000) and the overseas dependent deduction (if you support family abroad — often via year-end adjustment). Furusato Nozei usually waits until your second year, when you start paying resident tax.

Why can't I use Furusato Nozei in my first year?

Furusato Nozei reduces resident tax, which is charged on your prior-year income. In your first calendar year you typically owe no Japanese resident tax, so a donation has nothing to offset. Most foreign employees become eligible from their second year.

What is the real cost of Furusato Nozei?

If you stay within your income-based cap, about ¥2,000 total, regardless of how much you donate — the rest comes back as a reduction to next year's resident tax, and you keep the local gift. Donating above your cap loses the credit on the excess.

What changed with Furusato Nozei points in 2025?

Since October 1, 2025, donation portals can no longer award their own reward "points" for Furusato Nozei. The tax mechanics are unchanged — just choose gifts for their value rather than chasing point promotions.

Do I have to file a tax return for these?

Not always. The overseas dependent deduction can go through year-end adjustment, and Furusato's One-Stop path (5 or fewer municipalities) needs no return. The medical expense deduction and larger Furusato setups require a final tax return (確定申告).

Sources and further reading

Figures reflect rules current for 2026 and may change. Always confirm your own thresholds and cap with the NTA, your municipality, or a qualified professional.