An employee in Japan earning ¥5 million a year who collects ¥10 million in horse racing payouts sees their taxes rise by about ¥1.36 million (with ¥10,000 spent on the winning tickets, using 2026 income tax and resident tax). Payouts are "occasional income" (ichiji shotoku): after subtracting the cost of the winning tickets and a ¥500,000 special deduction, half of the rest is added to your salary and taxed. Ordinary racing fans cannot deduct losing tickets.
An employee must file a tax return once payouts minus the cost of winning tickets exceed ¥900,000. Lottery and toto/BIG (sports lottery) winnings are tax-exempt by law and need no filing. Enter your payouts and salary in the calculator below to see the extra tax and whether you must file.
Tax on a ¥10 million horse racing win: about ¥1.36 million more for a ¥5 million earner
Example: an employee earning ¥5 million receives ¥10 million in payouts in one year. The winning tickets cost ¥10,000 and social insurance premiums are about 15% of salary (¥750,000). Occasional income is taxed together with your other income, so the rate depends on how much you earn.[NTA No.1490 (in Japanese)]
- Occasional income: ¥10,000,000 − ¥10,000 − ¥500,000 = ¥9,490,000. The taxable portion is half: ¥4,745,000
- Total income: employment income ¥3,560,000 + ¥4,745,000 = ¥8,305,000. Because this exceeds ¥4.89 million, the basic deduction falls from ¥1.04 million to ¥620,000
- Income tax (incl. the reconstruction surtax): ¥979,649 on taxable income of ¥6,935,000. Compared with ¥90,358 before the win, that is ¥889,291 more
- Resident tax (10% income levy): ¥712,500, versus ¥238,000 before — ¥474,500 more
- Total ¥1,363,791. About ¥8.64 million of the payouts is left
For the same ¥5 million earner, the extra tax by payout amount looks like this (winning tickets cost ¥10,000 in every row).
| Payouts in the year | Taxable portion (half of occasional income) | Extra tax | Income tax return |
|---|---|---|---|
| ¥600,000 | ¥45,000 | ¥4,500 (resident tax only) | Not needed (resident tax return needed) |
| ¥1 million | ¥245,000 | ¥40,326 | Needed |
| ¥3 million | ¥1,245,000 | ¥242,426 | Needed |
| ¥10 million | ¥4,745,000 | ¥1,363,791 | Needed |
| ¥100 million | ¥49,745,000 | ¥24,176,820 | Needed |
The bigger the payout, the higher the tax bracket, and the smaller the basic deduction. In the ¥100 million case, total income exceeds ¥25 million and the basic deduction drops to ¥0.[NTA No.1199 (in Japanese)]
Horse racing payout tax calculator (2026)
Enter your total payouts for the year (January–December) and what you paid for the winning tickets to see the extra income tax and resident tax and whether you must file. Keirin (bicycle racing), boat racing and auto racing payouts work the same way. This tool assumes the payouts are occasional income. It does not apply if you bet continuously for profit and the payouts count as miscellaneous income (the cases in the Supreme Court rulings of March 10, 2015 and December 15, 2017).
Quick guide to tax on racing, lotteries and casinos: only lotteries and toto are tax-exempt
| Type | Tax | Basis / notes |
|---|---|---|
| Horse racing, keirin, boat racing, auto racing | Occasional income (taxable) | Only the cost of the winning tickets can be subtracted |
| Pachinko and pachislot | Occasional income (taxable) | Cash-outs leave few records, but they are not tax-exempt |
| Lotteries (Jumbo, Loto, Numbers) | Tax-exempt | Article 13 of the Lottery Tickets Act. About 36% of sales goes to the issuing local governments as revenue for public works |
| toto / BIG | Tax-exempt | Article 16 of the Act on the Implementation of Sports Promotion Lotteries |
| Winnings at casinos abroad | Occasional income (taxable) | Japanese residents must report income earned overseas too |
| Online casinos | Occasional income, etc. (taxable) | Betting from within Japan is the crime of gambling. Income from illegal acts is still taxed |
The lottery exemption is set out in Article 13 of the Lottery Tickets Act, and the toto/BIG exemption in Article 16 of the Act on the Implementation of Sports Promotion Lotteries. Of lottery sales, 46.5% goes to prizes and 36.2% to revenue (Tokyo Metropolitan Government figures).[Tokyo (in Japanese)]
Even if an online casino is legally run overseas, connecting from within Japan and placing bets is the crime of gambling.[National Police Agency (in Japanese)] Income from illegal acts is still part of the income amount for income tax.[Basic Income Tax Circular 36-1 (in Japanese)]
Calculating occasional income: payouts − winning tickets − ¥500,000, then tax half
- Losing tickets cannot be subtracted: only "the annual cost of tickets that won" can be deducted. Even if you lost money over the year, one big win can be taxed.[NTA (in Japanese)]
- The ¥500,000 applies once a year: in a year with other occasional income, such as a life insurance maturity payment, add it all up first, then subtract ¥500,000.
- No tax is taken from payouts: nothing is withheld when you collect, so reporting is up to you.
The tax rate is set after the halved amount is combined with employment income and other income. Taxable income under ¥1.95 million is taxed at 5%, and from ¥6.95 million up to ¥9 million at 23%, so the higher your income, the higher the rate.[NTA No.2260 (in Japanese)] Resident tax is 10% regardless of income.
When you must file: employees once payouts minus winning tickets exceed ¥900,000
An employee paid by one employer does not need to file an income tax return if their non-salary income totals ¥200,000 or less.[NTA No.1900 (in Japanese)] Occasional income is compared with this ¥200,000 after halving.[Basic Income Tax Circular 121-6 (in Japanese)] With payouts only, it breaks down as follows.
| Payouts − cost of winning tickets | Income tax return | Resident tax return |
|---|---|---|
| ¥500,000 or less | Not needed (occasional income is ¥0) | Not needed |
| Over ¥500,000 up to ¥900,000 | Not needed | Needed |
| Over ¥900,000 | Needed | Not needed if you file a tax return |
- Resident tax return: people who do not file an income tax return generally submit a resident tax return to their city office.[NTA filing guide (in Japanese)] We explain the steps in resident tax returns for people who do not file a tax return.
- If you file for the medical expense deduction or furusato nozei: include the payouts even if they are ¥900,000 or less.
- Self-employed people and pensioners: the ¥200,000 rule does not apply. If tax remains after subtracting deductions from income, you must file. Pensioners with public pension income of ¥4 million or less do not need to file an income tax return if their other income is ¥200,000 or less.
- Deadline: March 15 of the year after you collect. Not filing can bring a penalty for failure to file and delinquency tax. The ¥200,000 test combined with side-job income is covered in tax returns for side jobs.
Half of occasional income also counts toward total income. If you are a family member's dependant and this pushes your total income over ¥620,000 (2026), you no longer qualify for the dependant or spouse deduction.[NTA No.1180 (in Japanese)] National Health Insurance premiums are also calculated on income that includes occasional income, so next year's premiums rise (see how National Health Insurance premiums are calculated).[Shinjuku City (in Japanese)] Whether payouts count toward the dependant test of an employee health plan (annual income under ¥1.3 million, etc.) is something to confirm with your plan.
When losing tickets became expenses: two Supreme Court cases with ¥300 million+ a year in bets
If you buy betting tickets continuously for profit, the payouts are miscellaneous income and losing tickets are also necessary expenses. The Supreme Court ruled this way in two cases.
| Ruling | How the tickets were bought | Outcome |
|---|---|---|
| Supreme Court, March 10, 2015 | Automated software bought tickets across almost every JRA race, about ¥1 billion a year | Miscellaneous income; losing tickets are expenses[Courts (in Japanese)] |
| Supreme Court, December 15, 2017 | No software; own buying pattern covering nearly every race for six years, about ¥300 million to ¥2.1 billion a year, with a profit every year | Miscellaneous income; losing tickets are expenses[Courts (in Japanese)] |
Around the same time, the Tokyo High Court ruled on September 29, 2016 (appeal dismissed by the Supreme Court on December 20, 2017) that another taxpayer's payouts were occasional income. Following these cases the NTA revised its circular: payouts are miscellaneous income only when it is objectively clear that the person bet on nearly every race throughout the year and kept the overall return above 100% for the whole period. Ordinary racing fans who pick bets on weekends remain in occasional income and cannot subtract losing tickets.[NTA (in Japanese)]
Lottery winnings are tax-free, but sharing them means gift tax: about ¥22.9 million on ¥50 million
- The winnings themselves are tax-exempt, and you do not need to report them for the year you receive them.
- If you hand winnings to a spouse, child or friend, that amount is a gift. Above ¥1.1 million a year, gift tax applies. Giving ¥50 million of a ¥100 million prize to your spouse means about ¥22.9 million in gift tax.[NTA No.4408 (in Japanese)]
- For tickets bought jointly, if one person collects the full amount and then divides it, it may be treated as a gift. Before collecting, tell the bank counter it was a joint purchase and confirm how each person can receive their share.
- Buying a house or car in a family member's name after winning is also a gift. Moving money into a family member's account can become a problem at inheritance as a nominee deposit.
Summary
- Horse racing payouts are occasional income; half of (payouts − cost of winning tickets − ¥500,000) is taxed
- An employee earning ¥5 million who wins ¥10 million pays about ¥1.36 million more in income and resident tax (2026)
- Employees must file once payouts minus winning tickets exceed ¥900,000; between ¥500,000 and ¥900,000 a resident tax return is needed
- Losing tickets became expenses only in two Supreme Court cases with comprehensive buying of ¥300 million or more a year
- Lotteries and toto/BIG are tax-exempt, but giving winnings to family brings gift tax on amounts over ¥1.1 million
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References (sources)
- NTA No.1490 Occasional income (in Japanese)
- NTA No.2260 Income tax rates (in Japanese)
- NTA No.1199 Basic deduction / No.1410 Employment income deduction (in Japanese)
- NTA No.1900 Employees who must file a tax return / Basic Income Tax Circular 121-6 (in Japanese)
- NTA: Watch out for unreported income such as racing payouts (in Japanese)
- NTA: 2025 income tax return guide (in Japanese)
- NTA: Taxation of horse racing payouts (in Japanese)
- Supreme Court ruling of March 10, 2015 / ruling of December 15, 2017 (in Japanese)
- NTA No.1180 Dependant deduction / No.4408 Gift tax calculation and rates (in Japanese)
- Chiba City: resident tax changes from fiscal 2027 / Shinjuku City: how the income levy is calculated (in Japanese)
- National Police Agency: gambling at online casinos is a crime / Tokyo: how lottery revenue is used (in Japanese)
- Lottery Tickets Act, Article 13 / Act on the Implementation of Sports Promotion Lotteries, Article 16 (e-Gov law search)
This article is general information based on materials from the NTA, the courts and others as of November 10, 2026, and does not encourage gambling. The examples and calculator are estimates that subtract only social insurance premiums and the basic deduction. Whether payouts are occasional or miscellaneous income depends on the facts, so if you have large or continuous payouts, ask a tax office or a licensed tax accountant.