Why Employees Cannot Use the Specified Expense Deduction

The short answer: the hurdle by annual income (only the part above it is deductible)

Sources: National Tax Agency, Taxanswer No.1415 "Specified expense deduction for employment income earners" [NTA] and No.1410 "Employment income deduction" [NTA] (the deduction amounts applying from the 2025 tax year onwards)

The National Tax Agency puts it this way: where the total of your specified expenses for the year exceeds an amount equivalent to half of the employment income deduction, you may file a final tax return and subtract the excess from your income after the employment income deduction. Employees have already had the employment income deduction taken off as deemed expenses (1,440,000 yen on an annual income of 5 million yen), so the design only lets in people whose actual out-of-pocket spending goes beyond half of that.

Why it goes unused: three walls

1. The hurdle is high. It is 720,000 yen on an annual income of 5 million yen. Most companies pay commuting costs, and qualifications and training are outside the scope when the company pays for them (only your own share counts), so spending 720,000 yen of your own money in a year while working an ordinary job is rare.
2. You need a certificate from your employer. For every expense you need a document in which the payer of your salary certifies that it was directly necessary for carrying out your duties (the National Tax Agency publishes the form). Training costs and qualification costs alone may instead be certified by a career consultant, a national qualification, but for everything else not a single yen is deductible without your company's seal. In practice many companies turn the request down on the grounds that they have never issued one before.
3. The benefit is only the tax rate. What comes back is the part above the hurdle multiplied by your tax rate (income tax of 5 to 45 per cent plus resident tax of 10 per cent). A deduction of 280,000 yen at a 20 per cent rate is 56,000 yen. Whether that is worth the trouble of asking for the certificate, sorting receipts and filing a return is a judgement call.

The scope was widened from the 2013 tax year, when lawyers, tax accountants and others were added to qualification costs and the category of work-related necessary expenses was created, and from the 2020 tax year the cost of qualifications needed for the job was made explicit within that category. Even so, the number of users nationwide remains in the low thousands a year.

Which expenses qualify, and which do not

In every case the condition is that the payer of your salary has certified it, and no certificate will be issued for spending unrelated to the company's business. For a course on which you received an education and training benefit (reskilling subsidies), the specified expense is what you paid yourself after deducting the benefit.

The three patterns that still reach it

What works is a year in which more than a million yen lands at once, as with a graduate school for working adults or a long specialist course. Small book costs or the price of a suit will almost never carry you over the hurdle on their own. Conversely, splitting graduate school tuition across two years can leave neither year above the hurdle, so if you can group the payments into a single year, do so. That is the standard move.

The procedure: the employer's certificate, then a final tax return

1. Talk to your company before you spend. Hand the National Tax Agency's forms, such as the "Certificate concerning specified expenses (training costs and qualification costs)", to HR or general affairs and have them certify that the spending is necessary for your duties. Training costs and qualification costs may instead be certified by a career consultant (a national qualification). Asking in advance, "can I get a certificate for the specified expense deduction for this course?", goes through more easily than asking after the fact.
2. Keep your receipts and proofs of payment. You attach a statement of specified expenses and the certificate to your tax return, and receipts are either attached or presented.
3. File a final tax return (from January of the following year). You cannot claim it in the year-end adjustment. Entering the amount in the specified expense deduction field of the return preparation corner subtracts it from your income after the employment income deduction. Because it is a refund claim, you have five years to do it.

If you cannot obtain the certificate, there is unfortunately no route to the deduction. The alternatives in that case are the education and training benefit for a course (no company certificate needed, handled by Hello Work), or, on a single posting, negotiating a home-visit allowance or company housing with your employer.

Frequently asked questions

Summary

• A system that lets you deduct commuting costs, training costs, qualification fees, round-trip travel for a single posting, and book or clothing costs from employment income.
• Only the portion where the total of these specified expenses exceeds half of the employment income deduction is deductible. The threshold is ¥720,000 on a ¥5 million annual income and ¥950,000 on ¥8 million.
• Every expense needs a certificate from the employer. Only training costs and qualification fees can instead use a certificate from a career consultant.
• It tends to apply in a year when expenses bunch up over ¥1 million, such as a working adult's graduate program or a long professional course. Concentrating payments into a single year is the standard tactic.
• It cannot be claimed through year-end adjustment — you must file a tax return. If you cannot get the certificate, benefits such as the educational training benefit are an alternative.

Reference links (sources)

This article is based on the materials below. Whether a certificate can be issued is up to your employer, so please check before you spend.

• National Tax Agency, Taxanswer No.1415 Specified expense deduction for employment income earners (the scope of specified expenses, the half test, the certificate)
• National Tax Agency, Taxanswer No.1410 Employment income deduction (the amounts from the 2025 tax year onwards)
• National Tax Agency, forms for certificates concerning the specified expense deduction for employment income earners

Note: this article is general information. The amount that comes back varies with your income tax rate. For an individual decision, check with your tax office.