It's the summer bonus season. If your take-home pay feels "smaller than I expected from the gross amount," it's generally 75–85% of the gross. What gets deducted are social insurance premiums (health insurance, employees' pension, employment insurance) and income tax. What is surprisingly little known is that the income tax rate on a bonus is determined not by "the size of the bonus" but by "the previous month's salary," and that residence tax is not deducted from a bonus. Once you understand the mechanism, the worry of "am I being over-deducted?" goes away.
① What is deducted are the five items: health insurance, (nursing care insurance), employees' pension, employment insurance, and income tax. Residence tax is not deducted (it is already withheld from your monthly salary).
② Social insurance premiums are "standard bonus amount (gross, rounded down to the nearest ¥1,000) × rate." Your own share is generally employees' pension 9.15% + health insurance about 5% (for ages 40–64, about 6% including nursing care insurance) + employment insurance 0.55% = about 15% in total.
③ The income tax rate (0–45.945%) is determined by "the previous month's salary (after social insurance deductions)" and the number of dependents, and is applied to the bonus after social insurance deductions[NTA No.2523].
④ This withholding is a provisional prepayment. Any excess comes back through the year-end adjustment.
List of what is deducted from a bonus
| Item | Guide to your own share | Point |
|---|---|---|
| Employees' pension premium | 9.15% | The standard bonus amount is capped at ¥1.5 million per payment (the excess is not charged) |
| Health insurance premium | About 5% (differs by Kyokai Kenpo prefecture) | The standard bonus amount is capped at a cumulative ¥5.73 million per fiscal year |
| Nursing care insurance premium (ages 40–64) | About 0.8–0.9% | Collected together with health insurance |
| Employment insurance premium | 0.55% (FY2025, general businesses) | Charged on the gross (total payment) amount |
| Income tax (including reconstruction surtax) | 0–45.945% (varies by person) | The rate is determined by the previous month's salary and the number of dependents[NTA] |
| Residence tax | ¥0 | Not deducted from a bonus (the annual tax amount is withheld from monthly salary split into 12. How to read the determination notice) |
Calculation example: gross ¥600,000, age 30 (no dependents, previous month's salary ¥300,000)
- Standard bonus amount: ¥600,000
- Employees' pension: ¥600,000 × 9.15% = ¥54,900
- Health insurance: ¥600,000 × about 5% = about ¥30,000
- Employment insurance: ¥600,000 × 0.55% = ¥3,300
- Income tax: previous month's salary (after social insurance deductions, about ¥260,000), 0 dependents → apply the computed rate of 6.126% to the bonus after social insurance deductions (about ¥512,000) = about ¥31,400
Take-home ≒ ¥600,000 − about ¥120,000 = about ¥480,000 (about 80% of gross)
* This is an estimate; the health insurance rate and rounding differ by insurer. For the exact rate, please check the National Tax Agency's "Table of computed withholding rates for bonuses"[NTA tax table].
The mechanism of "over-deduction" and why it comes back
- The rate is determined by "the previous month's salary": Someone who did a lot of overtime the previous month gets a higher bonus tax rate too. Conversely, if the previous month's salary was low, the rate goes down. The size of the bonus itself is not directly related to the rate[NTA No.2523].
- It is purely a provisional payment: The correct annual income tax is recalculated in the year-end adjustment, and any over-deducted portion is refunded in your December salary. Even if you feel "the tax on my bonus is too high," it balances out over the year.
- At companies where bonuses are paid four or more times a year, there are special rules such as being treated as "salary" for social insurance purposes.
- People scheduled to leave the company in the payment month, or who had no salary the previous month, use a different calculation method.
A perspective on increasing your take-home pay
- Tax saving in the bonus month alone is nearly impossible, but over the year you can lower income tax and residence tax with iDeCo, Furusato Nozei, the insurance premium deduction, and the like. A bonus is ideal for securing the funds.
- For a high bonus that exceeds the standard bonus amount cap (employees' pension ¥1.5 million per payment), no employees' pension is charged on the excess, but that portion is also not reflected in your future pension amount.
- Bonuses will also include the child and childcare support levy (integrated with health insurance premiums).
FAQ
How much is the take-home pay on a ¥1 million bonus?
It varies by conditions, but social insurance premiums of about ¥150,000 plus income tax (about ¥60,000–150,000 depending on the previous month's salary) are deducted, so take-home is generally about ¥750,000–800,000. The exact figure is calculated from your employer's premium rates and the previous month's salary.
Summary
- Take-home pay from a bonus is roughly 75% to 85% of the gross amount. Deductions are health insurance, long-term care insurance, employees' pension, employment insurance and income tax.
- Social insurance premiums are the standard bonus amount times the rate, about 15% in total for the employee's share. Resident tax is not deducted from bonuses.
- The income tax rate depends not on the bonus amount but on the previous month's salary (after social insurance) and the number of dependents.
- For a gross bonus of ¥600,000, age 30, no dependents and a previous month's salary of ¥300,000, take-home pay is about ¥480,000 (about 80% of gross).
- Withholding is a provisional prepayment. Any excess is refunded in the December salary through the year-end adjustment.
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Data sources
- Withholding on bonuses (computed rate based on the previous month's salary): National Tax Agency No.2523 Withholding on bonuses (in Japanese)
- Table of computed withholding tax amounts for bonuses (2025): National Tax Agency withholding tax table (in Japanese)
- Standard bonus amount caps (health insurance ¥5.73 million per fiscal year, employees' pension ¥1.5 million per payment) and employees' pension premium rate: Japan Pension Service — Standard monthly remuneration and standard bonus amount (in Japanese)
* Health insurance rates differ by Kyokai Kenpo prefecture and by health insurance association. The calculation examples in this article are estimates; for exact amounts, please check with your employer's payroll staff or your insurer.