Quit Between January and April: Residents' Tax at Once

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

Every year people look at the payslip for the month they left a job and are startled by how much residents' tax was taken. Residents' tax is charged on the previous year's income and withheld from salary in 12 instalments, from June through May of the following year, so when you leave partway through, the month you leave decides how the rest is paid. If you leave between 1 January and 30 April, the employer is required to take the remaining months in one go - "lump-sum collection" - from your final salary or retirement allowance. If you leave between 1 June and 31 December, you choose between the lump sum and payment slips. On an income of 5 million yen, residents' tax runs about 20,000 yen a month, so leaving in January means about 80,000 yen disappears from the final salary. And that is not the end of it: in June of the following year, a payment slip arrives for residents' tax on the income of the year you left. Here is the ready-reckoner by month of leaving and by income, and the second bill, set out from municipal guidance and the Local Tax Act.

The short answer: leaving splits into three cases by month

Date you leave	Residents' tax still outstanding (on last year's income)	How it is paid	Can you choose?
1 January to 30 April	From the month after you leave through May (1 to 4 months)	Lump-sum collection from the final salary or retirement allowance	No choice (taken in one go even without a request from you). Ordinary collection only where the balance exceeds the salary and allowance
1 May to 31 May	May only	One month, withheld from the May salary as usual	- (nothing remains)
1 June to 31 December	From the month after you leave through May of the next year (5 to 11 months)	Lump-sum collection or ordinary collection (you pay by payment slip)	You choose (lump sum on your own request). If a new job is lined up, special collection can be carried over

Sources: Fujisawa City, "Lump-sum collection of specially collected tax for leavers" [Fujisawa City]; Osaka City, "Where there is a resignation or a transfer (filing the notification of change for salary earners)" [Osaka City] (Local Tax Act, Article 321-5)

On leaving between January and April, Fujisawa City's guidance states that the employer "must collect the tax in a single lump sum by special collection from the salary or retirement allowance paid up to 31 May, even where the taxpayer has not asked for it." It is a duty under the law rather than the employer's discretion, so asking to spread the payments will not get you anywhere.

Ready-reckoner: residents' tax taken from the final salary, by month of leaving and income

The annual amount of residents' tax is "taxable income for the previous year x 10% + the per-capita levy of 6,000 yen (including the forest environment tax)". For an employee (social insurance at 15% of income, no dependants), the monthly guide amounts work out as follows.

Previous year's income	Residents' tax a year (guide)	A month	Leaving in January (4 months at once)	Leaving in February (3 months)	Leaving in March (2 months)	Leaving in April (1 month)
3 million yen	About 120,000 yen	About 10,000 yen	About 40,000 yen	About 30,000 yen	About 20,000 yen	About 10,000 yen
4 million yen	About 179,000 yen	About 14,900 yen	About 60,000 yen	About 45,000 yen	About 30,000 yen	About 15,000 yen
5 million yen	About 244,000 yen	About 20,300 yen	About 81,000 yen	About 61,000 yen	About 41,000 yen	About 20,000 yen
6 million yen	About 309,000 yen	About 25,800 yen	About 103,000 yen	About 77,000 yen	About 52,000 yen	About 26,000 yen
8 million yen	About 453,000 yen	About 37,800 yen	About 151,000 yen	About 113,000 yen	About 76,000 yen	About 38,000 yen

Leaving between June and December and choosing the lump sum (or agreeing when the employer asks for it) is far bigger: 11 months for leaving in June, 5 months for leaving in December. On an income of 5 million yen, leaving at the end of June and taking the lump sum means about 220,000 yen out of the final salary. On a gross monthly salary of 300,000 yen, that plus social insurance wipes out almost the whole take-home, and choosing ordinary collection to pay in four instalments after leaving is far easier on the cash flow. For how the amount itself is worked out, see how residents' tax is calculated.

The residents' tax year against the month you leave (income of 5 million yen, about 20,000 yen a month)

Source: compiled from Article 321-5 of the Local Tax Act and municipal guidance. Amounts assume an income of 5 million yen, social insurance at 15% and no dependants

The second bill: in June of the next year, residents' tax on the income of the year you left

Even once the lump sum has cleared the previous year, there is another year of residents' tax to come. The tax on the salary from January of the year you left up to the month you left arrives in June of the next year, by payment slip (ordinary collection). Because it does not pass through an employer, it comes in four instalments - June, August, October and the following January (this varies by municipality).

Income of 5 million yen (about 410,000 yen a month), leaving at the end of March, out of work afterwards

On leaving (March): the remaining 2 months of the previous year, about 41,000 yen, taken in one go from the final salary
June of the next year: about 27,000 yen by payment slip, on the roughly 1.25 million yen of salary for January to March of the year you left (after the 650,000 yen employment income deduction, the 430,000 yen basic deduction and the social insurance deduction)
If you have started a new job, you can ask the new employer to switch you to special collection

Stay out of work into the new year and this second residents' tax lands at the same time as National Health Insurance and National Pension contributions. Income tax, by contrast, has been over-withheld, so file a refund claim in January of the next year to get it back and put it towards the residents' tax. If you left for reasons on the employer's side, National Health Insurance falls sharply under the reduction for involuntary job losers.

Leaving between June and December: lump sum or ordinary collection?

Take the lump sum if you have the cash and want fewer things to handle after leaving. There is no payment slip to forget (and no late-payment charge), and you need not think about residents' tax again until June of the next year.
Take ordinary collection if you will be living on unemployment benefit or savings. You keep the final salary in hand and pay in four instalments. The slips arrive from the municipality one to two months after you leave. If you start a new job straight away, special collection can instead be carried over to the new employer (the notification of change for salary earners goes from the old employer to the new one), and then there is neither a payment slip nor a lump sum.
Employers will press for the lump sum. Osaka City's guidance also recommends lump-sum collection to employers, since switching someone to ordinary collection means extra filing for them. But for leaving between June and December the choice is yours. When you give notice, add a line: "please put my residents' tax on ordinary collection."
Where a retirement allowance is paid, the lump sum is often taken out of it. That is one reason the allowance lands smaller than expected. For the tax on the allowance itself, see the take-home ready-reckoner for retirement allowances.

Common misunderstandings

"You can refuse the lump sum" - not if you leave between January and April. It is a duty under the law. Only where the balance is larger than the total of salary and retirement allowance paid by 31 May does the part that cannot be taken move to ordinary collection.
"Residents' tax goes away once you leave" - it does not. Two years' worth, the previous year and the current year, arrive in turn after you leave. Even if you move abroad, the year in which you were living in Japan on 1 January is still charged.
"Leaving at the end of the year cuts your residents' tax" - it does not. Residents' tax follows income, and the month you leave has nothing to do with it. All that changes is when you pay. Leaving in December simply means you choose how to pay the five months from January to May.
"If the new employer withholds it, no paperwork is needed" - a notification is required. The old employer enters the new workplace on the "notification of change for salary earners" and files it with the municipality, or you ask the new employer to take it on. If it is not in time, a payment slip arrives once and the new employer then switches you back to special collection.

For the whole picture of tax and social insurance when you leave, see tax and procedures when changing or leaving a job; for choosing cover afterwards, see the three health insurance options after leaving.

Frequently asked questions

Does the residents' tax that arrives after I leave come back through a tax return?

Residents' tax does not come back; income tax does. If you left partway through the year and had no year-end adjustment, a refund claim from January onwards returns the income tax that was over-withheld, and the same filing feeds into the residents' tax calculation, so entering the National Pension and National Health Insurance you paid after leaving as deductions trims the residents' tax that arrives next June.

Summary

Resigning between January 1 and April 30 means the remaining resident tax is withheld in one lump sum from your final pay or severance. This is a legal requirement with no choice.
Resigning between June 1 and December 31 lets you choose between a lump-sum withholding or regular payment by mail-in notice.
On an annual income of ¥5 million, resigning in January deducts about ¥81,000 from the final pay; resigning at the end of June with lump-sum withholding deducts about ¥220,000.
The following June, a payment notice for resident tax on the income earned in the year you resigned arrives (a second bill).
If you want to keep more cash on hand after resigning between June and December, tell your employer at resignation that you want regular payment for resident tax.

Reference links (sources)

This article is based on the materials below. The residents' tax figures are estimates and vary with dependants, deductions and the municipality.

Note: this article is general information. For an individual decision, check with your municipality and your employer.