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Japan Retirement Lump-Sum Tax Calculator

Calculate after-tax net of your lump-sum retirement payment (退職金, taishokukin) using Japan's preferential tax treatment.

Inputs

Fractional years are rounded up.

Result

Gross payout
¥15,000,000
Retirement deduction
¥8,000,000
Taxable retirement income (÷2)
¥3,500,000
Income tax + surtax
¥278,222
Resident tax (10%)
¥350,000
Net (after tax)
¥14,371,778
Take-home rate
95.8%

※ Japan's lump-sum retirement payment receives substantial tax relief: large fixed deduction based on years of service, followed by 1/2 multiplier on the remaining amount, taxed under separate (non-aggregated) taxation. This is one of the most generous tax treatments in the Japanese tax code.

How the calculation works

Lump-sum retirement payments receive three layers of relief in Japan:

  1. Retirement deduction (退職所得控除) based on years of service:
    • ≤ 20 years: ¥400,000 × years (minimum ¥800,000)
    • > 20 years: ¥8,000,000 + ¥700,000 × (years − 20)
  2. 1/2 multiplier: Taxable retirement income = (gross − deduction) ÷ 2
  3. Separate taxation: Calculated separately from salary/other income (not aggregated, so it does not push you into a higher bracket for other income)

Worked example

¥20,000,000 payout after 30 years of service:

  • Deduction: ¥8,000,000 + ¥700,000 × 10 = ¥15,000,000
  • Taxable retirement income: (¥20M − ¥15M) ÷ 2 = ¥2,500,000
  • Income tax (5%–10% progressive): ~¥152,500
  • Resident tax (10%): ¥250,000
  • Net: ¥19,594,300 (97.97% take-home)

Foreign residents: critical paperwork

  • 退職所得の受給に関する申告書 (taishoku-shotoku jukyu shinkokusho): You MUST submit this form to your employer before retirement. If you fail to do so, the company withholds a flat 20.42% on the entire payout, ignoring the deduction. For ¥20M, this means ¥4.084M withheld vs. ¥400K with the form — a ¥3.6M difference.
  • If withholding was flat-rate (form not submitted), you must file your own tax return (確定申告) the following March to claim a refund.
  • Combined retirement: If you also withdraw iDeCo or corporate DC (defined contribution pension), the deduction is shared if taken in the same period. Stagger by 5+ years to claim each deduction in full.

Leaving Japan after retirement

  • Lump-sum pension withdrawal (dattai-ichijikin) is separate from the company retirement bonus. See our lump-sum pension calculator for the 20.42% withholding refund.
  • If you depart in the same calendar year as receiving your retirement bonus, you may need to appoint a Tax Representative (納税管理人) to handle final filing.
  • For high-net-worth retirees (¥100M+ assets), the Exit Tax under Article 60-2 may also apply.

Lump-sum vs. annuity?

Most Japanese companies offer a choice between a single lump-sum payout and a multi-year annuity (or a blend). The lump-sum is usually more tax-efficient due to the heavy deduction, but the annuity smooths cash flow and can earn the company's assumed interest rate. Compare both with our lump-sum vs. annuity comparison (Japanese, but works the same with JPY values).

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