A classic question for dual-income couples in Japan: "Which parent should claim the children as dependents?" In fact, this question has two answers. Health insurance dependency and tax dependency are entirely separate systems, with different rules and different pros and cons. For health insurance, the child is in principle automatically placed under the higher-earning parent (if the income gap is within 10%, you can choose), while for taxes you can freely choose each year at year-end adjustment, and the choice can change your resident tax. Based on the Ministry of Health, Labour and Welfare's circular and primary sources from the National Tax Agency, this article sorts out all the points of confusion.
The big premise: there are two kinds of "dependency"
| Health insurance dependency (dependent) | Tax dependency (dependent relative) | |
|---|---|---|
| What does it determine? | Which parent's health insurance card the child carries | The parents' income tax and resident tax calculation (deductions and tax-exemption determination) |
| Who decides? | Determined by rules (in principle, the higher earner) | The couple can choose freely (no double-claiming) |
| When can it change? | When a qualifying event occurs (notification) | Can be re-chosen every year at year-end adjustment or in the tax return |
| Child's premiums / deduction amount | Dependents pay no premiums (under employee health insurance) | No deduction for children under 16 / 380,000 yen for ages 16–18, etc. |
It does not have to be "the child is on the husband's health insurance, so taxes go to the husband too." A split such as health insurance under the husband, taxes under the wife is perfectly normal.
Health insurance: in principle the higher earner; if the gap is within 10%, you can choose
Which parent's dependent a dual-income couple's child becomes is governed by a nationwide rule clarified in a Ministry of Health, Labour and Welfare circular (applied from August 2021).
- In principle, the child becomes the dependent of the parent with the higher annual income. Annual income is compared using the projected "income over the coming year," estimated from past, current, and expected earnings
- If the couple's income gap is within 10% of the higher earner's income, the child can, by notification, become the dependent of the parent who mainly maintains the household (in effect, you can choose)
- Special rule during childcare leave: even if incomes reverse during childcare leave, there is no need to move the dependent (to keep the child's status stable). If you are asked to switch dependency because of childcare leave, show this circular and confirm
- If one spouse is on National Health Insurance (kokuho): kokuho has no "dependent" mechanism, and premiums are charged for the child too according to the number of members (per-capita levy). If the child can be made a dependent on the employee health insurance side, putting the child on the employee plan is in principle more advantageous premium-wise
If incomes are about the same, choose based on what the health insurance society offers. Where the gap is within 10% and you can choose, the practical approach is to compare supplementary benefits (society-specific benefits that further reduce out-of-pocket costs), the conditions for family allowances, and perks such as health checkups and recreation facilities. Company family allowances are often conditioned on "the child being a health insurance dependent," so check the work rules as a set too.
Taxes: under 16, the lower earner; 16 and over, the higher earner — as a rule of thumb
For tax dependency, you can choose which parent claims the child on the year-end adjustment form (Application for Exemption for Dependents). The key point is that the strategy changes with the child's age.
| Child's age | Deduction | Basic strategy |
|---|---|---|
| Under 16 (young dependent relative) | No income tax or resident tax deduction | Instead of a deduction, the child counts toward the number of dependents in the resident tax exemption determination. Claiming the child under the lower-income parent (e.g. a part-time worker) can make that parent's resident tax exempt in some cases |
| Ages 16–18 | Dependent deduction of 380,000 yen (330,000 yen for resident tax) | Claiming under the parent with the higher tax rate = higher income yields a larger tax saving |
| Ages 19–22 (university-age) | Specific dependent deduction of 630,000 yen (kept at the full amount via the special deduction up to a child's annual income of 1.5 million yen) | Likewise, the higher-income parent as a rule. Watch the child's part-time job income threshold separately |
Example of the "claim under the lower earner" technique for children under 16
- Husband: annual income 6 million yen / Wife: annual income 1.6 million yen, 2 children (both under 16)
- If the 2 children are claimed under the wife's (tax) dependency, her resident tax exemption threshold rises to the "2 dependents" level (roughly: income of about 1.36 million yen, or a bit over 2 million yen in salary income; varies by municipality), and the wife's resident tax can become exempt
- Since children under 16 give zero income tax deduction to either parent, there is nothing to lose — that is the crux of this technique
* Exemption thresholds vary by municipality and number of dependents. See the conditions for resident-tax-exempt households to understand the mechanism.
The deduction rules for children 16 and over and the income thresholds for university students are covered in the complete guide to the dependent deduction and student part-time jobs and parents' dependency.
What about the child allowance, family allowances, and childcare fees?
- Child allowance (jido teate): the recipient is "the parent who maintains the child's livelihood to the greater degree" = in principle, the higher earner, and the couple cannot choose. Since the income limit was abolished from October 2024, the amount is the same whichever parent is the recipient
- Company family allowance (dependent allowance): depends on the company's rules. Conditions vary — some require "being a health insurance dependent," others "being a tax dependent relative" — so check both companies' rules before changing how you claim dependency. If the allowance exceeds 10,000 yen a month, its impact can outweigh the finer tax pros and cons
- Childcare fees and high school enrollment support funds: these are determined by household income (both spouses combined), so it makes no difference which parent claims the child
- If you become a single parent: how you claim dependency directly affects eligibility for the single-parent deduction and the child rearing allowance, so that needs separate consideration
What to do today
What to do today
- Line up both spouses' projected income for the coming year and check that health insurance dependency follows the "higher earner" rule (if the gap is within 10%, you have a choice)
- Estimate, using your municipality's exemption thresholds, whether switching a child under 16 to the lower earner's "tax dependency" would make that parent's resident tax exempt (the change can be made at year-end adjustment)
- Check the conditions for family allowances at both companies (health insurance dependency or tax dependency) in the work rules
FAQ
Q. Can we split it — health insurance under the husband, taxes under the wife?
A. Yes. Health insurance dependents and tax dependent relatives are separate systems and are not linked. A combination is possible: follow the circular's rule for health insurance (in principle, the higher earner), and claim the child under whichever parent is more advantageous for taxes at year-end adjustment.
Q. The wife earns more, but the company told us to put the child under the husband's dependency.
A. For health insurance, a Ministry of Health, Labour and Welfare circular has clarified that in principle the child is "the dependent of the parent with the higher annual income" (applied from August 2021). Except where the income gap is within 10%, gender and who is the registered head of household are not the criteria. Show the circular (Hohohatsu 0430 No. 2) and confirm.
Q. If incomes reverse during childcare leave, do we need to switch the dependency?
A. For health insurance, a special rule provides that the dependent need not be moved during periods of childcare leave and the like. If incomes reverse on a lasting basis after returning to work, review it at that point.
Q. For a child under 16, doesn't it make no difference which parent claims them?
A. The income tax deduction is zero either way, but the child is counted as a dependent in the resident tax exemption determination. Claiming the child under the lower-income parent can make that parent's resident tax exempt, which can in turn lead to benefits and reductions for tax-exempt households.
Reference links (sources)
* This article is general information. Health insurance society practices and municipal exemption thresholds vary. For individual decisions, check with your employer's health insurance society, your municipality, a tax office, or a professional.