Year-End Adjustment vs Tax Return: Which One, and When

This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.

The year-end adjustment (nenmatsu chosei) is the procedure in which your employer settles a whole year of income tax in the December payroll; the final tax return (kakutei shinkoku) is the one you file yourself at the tax office between 16 February and 15 March of the following year[NTA No.2020]. Most employees are finished with the year-end adjustment alone. However, the medical expense deduction, the donation deduction, the casualty loss deduction and the first year of the housing loan deduction cannot be handled in a year-end adjustment, so those parts need a return. Conversely, people whose total salary exceeds 20 million yen, and people who left a job during the year and did not start a new one within the year, cannot have a year-end adjustment at all[NTA No.2665]. If you need both, go in this order: year-end adjustment, then withholding slip (gensen choshu-hyo), then tax return. For the 2026 tax year (Reiwa 8), the increase in the basic deduction takes effect on 1 December 2026, so only those whose year-end adjustment was finished on or before 30 November settle the difference through a return. This article puts the differences in a single table and checks, against National Tax Agency (NTA) materials, which one you do and when.

The short answer: this is what separates the two

	Year-end adjustment	Final tax return
Who does it	Your employer (the payer of the salary)	You
When	December of that year (when the last salary is paid)	16 February to 15 March of the following year
What you hand in	The dependent deduction declaration, the basic deduction declaration and the insurance premium deduction declaration, to your employer	The final return form, to the tax office
Income covered	Only the salary that employer pays	All of your income, added together
Deductions available	The deductions that fit on the three declaration forms (listed below)	Those, plus the medical expense, donation and casualty loss deductions and the first year of the housing loan deduction
When it is settled	Reflected in the December salary (January for some employers)	Refunded to the account you name after filing; tax due is paid by 15 March
Deadline	Hand it in by the day before you receive the last salary of the year	Refund only: five years from 1 January of the following year. If tax is due, 15 March

Sources: NTA No.2020, No.2665, No.2030, and "How to do the year-end adjustment for 2026"[NTA (in Japanese)]

In a word, the year-end adjustment settles the salary side only, while the return recalculates everything together. The result of the year-end adjustment becomes your withholding slip, and in the return you copy those figures across and carry on from there. You are not doing the same work twice. The whole picture is set out in the year-end adjustment for employees and the tax return for employees.

Deductions a year-end adjustment can handle, and those it cannot

You hand your employer three forms. The deductions that fit on those three are the ones the year-end adjustment finishes; the rest go to a return.

Finished in the year-end adjustment (just hand in the form)

The basic deduction, the income adjustment deduction, the spousal deduction and special spousal deduction, and the special deduction for specified relatives[NTA form (in Japanese)]
The dependent deduction and the deductions for persons with disabilities, widows, single parents and working students[NTA form (in Japanese)]
The deductions for life insurance premiums, earthquake insurance premiums, social insurance premiums and small-scale enterprise mutual aid contributions (iDeCo)[NTA form (in Japanese)]
The housing loan deduction from the second year onwards (give your employer the deduction certificate and form sent by the tax office, plus the lender's year-end loan balance certificate; the balance certificate is not needed if the lender uses the "report method" (chosho hoshiki))[NTA No.1211-1]

Not possible in the year-end adjustment (file a return)

The medical expense deduction - file a return with a statement of the expenses[NTA No.1120]
The donation deduction - file a return with the receipts (hometown tax donations have the special rule below)[NTA No.1150]
The casualty loss deduction - when disaster, theft or embezzlement damages your assets[NTA No.1110]
The first year of the housing loan deduction - the first year always needs a return[NTA No.1211-1]

Hometown tax donations (furusato nozei) are an exception. The one-stop special rule is available to salary earners who do not need to file a return and who gave to five local governments or fewer. Once you apply, nothing is deducted from your income tax; the whole amount is deducted from the next year's resident tax[MIC hometown tax portal (in Japanese)]. If you file a return for the medical expense deduction or anything else, you no longer meet the premise of the special rule, so write the donations on the return as well.

People who cannot have a year-end adjustment at all

The December year-end adjustment covers people employed throughout the year and people who joined during the year and are still employed at the end of it. The following are excluded[NTA No.2665].

Who is excluded	How it gets settled
People whose total salary payable for the year exceeds 20 million yen	A return (No.1900)
People who have not handed in the dependent deduction declaration (column B, otsu-ran)	A return. The same goes for the secondary salary when you hold two jobs and filed the declaration with the other employer
People who left during the year and did not start a new job within the year	A return. Usually an overpayment, so it becomes a refund claim
Day labourers and the like (column C, hei-ran)	A return
People granted a grace or a refund of withholding tax under the Disaster Relief Tax Act	A return

Sources: NTA No.2665, "How to do the year-end adjustment for 2026" pages 5-6[NTA (in Japanese)], No.1900[NTA No.1900]

There are exceptions for people who leave during the year. A year-end adjustment is done on leaving for: (1) someone who became a non-resident; (2) someone whose employment ended on death; (3) someone who left because of a severe physical or mental disability (unless they are expected to work again); (4) someone who left after receiving the salary payable in December; and (5) a part-timer whose total salary for the year is 1.36 million yen or less (unless they expect salary from another employer in the same year)[NTA No.2665]. The 1.36 million yen in (5) reflects the 2026 tax reform. The finer branches are sorted out in who does not get a year-end adjustment.

If you need both: year-end adjustment, then withholding slip, then return

In a year of heavy medical bills, a year you bought a home, or a year you gave to six or more local governments, you do both. There is only one order.

October to November: hand your employer the three forms. Attach the certificates for life insurance premiums, earthquake insurance premiums and iDeCo. Do not hand in medical expenses or donations.
December: your employer settles up. If you overpaid, the money is added to the December salary (January at some employers); if you underpaid, the shortfall is taken out.
Receive your withholding slip. An employer you left during the year must issue it within one month of the leaving date[NTA guide to statutory records (in Japanese)].
The following year: copy the figures from the slip into your return. All you add are the deductions the year-end adjustment could not take. A refund-only return can be filed for five years from 1 January of the following year, so there is no need to wait for 16 February[NTA No.2030].

Three common patterns

Year-end adjustment only - one employer, no medical expenses, no donations, no first year of a housing loan deduction
Year-end adjustment plus a return - medical expense deduction, the first year of the housing loan deduction, or donations to six or more local governments
A return only - salary over 20 million yen, someone who left during the year and did not start a new job, or someone taxed under column B

Only for the 2026 tax year: the reform that takes effect on 1 December

The 2026 tax reform raised the basic deduction and other amounts. The reform takes effect on 1 December 2026 and applies to income tax from the 2026 tax year onwards. The NTA itself states that "there is no change to withholding practice up to November 2026"[NTA, on the increase in the basic deduction (in Japanese)].

Item	After the reform (2026 and 2027)	Before the reform
Basic deduction (total income 4.89 million yen or less)	1.04 million yen	950,000 to 680,000 yen
Basic deduction (over 4.89 million and up to 23.5 million yen)	670,000 yen / 620,000 yen	630,000 yen / 580,000 yen
Minimum guaranteed employment income deduction	740,000 yen	650,000 yen
Income requirement for dependent relatives and same-household spouses	620,000 yen or less (1.36 million yen or less if salary only)	580,000 yen or less (1.23 million yen if salary only)

Source: NTA, "Outline of the April 2026 reform of withholding income tax", pages 1-2[NTA (in Japanese)]

The change to the income requirement for dependent relatives applies to salary paid on or after 1 December 2026. If a family member now meets the requirement, hand in the dependent deduction declaration again and write "1 December 2026, reform" in the box for the date and reason of the change[NTA Q&A, Q2-1 (in Japanese)].

The point to watch is people who received their last salary on or before 30 November 2026. Their year-end adjustment does not reflect the post-reform deductions, so the difference has to be settled through a return[NTA Q&A, Q1-3 (in Japanese)]. Because the effective date is 1 December, only those whose year closed in November are pushed onto the filing side. That is nobody's fault, so if it sounds like you, check your withholding slip.

If you have a side job: the 200,000 yen rule is about income tax only

There are three typical cases where a salary earner has to file a return[NTA No.1900].

People whose annual salary income exceeds 20 million yen
People with salary from one place whose income other than salary and retirement income exceeds 200,000 yen in total
People with salary from two or more places, where the salary not covered by a year-end adjustment plus income other than salary and retirement income exceeds 200,000 yen

The third one is the easy one to miss. Salary from the second job is not covered by a year-end adjustment, so however small the amount, you judge it by adding that salary to your side-job income.

The "no filing needed under 200,000 yen" rule is a matter of income tax alone. Resident tax has no equivalent rule, so if you do not file a return, a resident tax declaration to your city or ward remains. Resident tax on salary earners is collected from the payroll by special collection as a rule, and you cannot choose ordinary collection just because you would prefer it[MIC, individual resident tax (in Japanese)]. The "pay it myself" box on the return form works only for income other than salary[NTA filing guide (in Japanese)], so if the side job pays a salary, it is added to your main salary and withheld there.

The income category of a side job and how resident tax treats it are explained in filing a return for a side job.

Summary

A year-end adjustment is settled by the employer through December's salary, while a final tax return is filed by the individual at the tax office between February 16 and March 15 of the following year.
The medical expense deduction, donation deduction, casualty loss deduction, and the first year of the home loan deduction cannot be handled through year-end adjustment and require a final tax return.
Those whose total salary exceeds ¥20 million, and those who left a job mid-year without re-employment by year's end, cannot receive a year-end adjustment.
If you need both, the order is: year-end adjustment, then the withholding slip, then the final tax return. If it's only for a refund, you can file anytime within five years starting January 1 of the following year.
Those who received their final salary payment on or before November 30, Reiwa 8 (2026), can reconcile the revised basic deduction through a final tax return.

Reference links (sources)

NTA, No.2665 People covered by the year-end adjustment - who is covered, the five exceptions, and the 1.36 million yen figure
NTA, No.2020 Final tax return - the filing period and deadline
NTA, No.1900 Salary earners who must file - the 200,000 yen test and two-employer cases
NTA, No.2030 Refund claims - the five-year window
NTA, How to do the year-end adjustment for 2026 - who is not covered
NTA, No.1120 Medical expense deduction - by return
NTA, No.1150 Donation deduction - by return
NTA, No.1110 Casualty loss deduction - by return
NTA, No.1211-1 Special deduction for housing loans - the first year and later years
NTA, Outline of the April 2026 reform of withholding income tax - the post-reform amounts
NTA, Q&A on the increase in the basic deduction - the effective date and how to settle up
MIC, Tax deductions for hometown tax donations - the one-stop special rule

Note: this article is general information. Year-end adjustment practice differs from employer to employer. For an individual decision, check with your employer, your local tax office or a tax accountant.