Medical Expense Deduction Guide for Company Employees
It cannot be claimed through year-end adjustment. How to get tax back by filing a return
If the medical expenses of your whole family combined exceed ¥100,000 in a year, a tax return will refund your income tax and lower next year's residence tax. We also explain how to choose between this and the Self-Medication Tax System.
Employees and the medical expense deduction
Why it cannot be claimed through year-end adjustment, and how to finish with just a tax return.
BasicsList of qualifying medical expenses
Hospitals, medicine, transport, childbirth, dental, nursing care. A thorough OK/NG breakdown.
ImportantCalculating the deduction and refund
Refund simulations by income level and how family aggregation works.
CalculationSelf-Medication Tax System
A special rule available once over-the-counter medicine exceeds ¥12,000. A flow chart for which is better.
Special ruleHow to file the return
The shortest route when filing solely for medical expenses. e-Tax supported.
StepsCommon mistakes and cautions
Netting against insurance payouts, relatives living apart, and the link to Furusato Nozei.
CautionEmployees and the medical expense deduction
An employee's tax is basically settled through year-end adjustment, but the medical expense deduction is outside its scope. To claim it, you must file a tax return. That said, filing solely for the medical expense deduction is allowed, and with e-Tax it takes about 30 minutes on a smartphone.
Life insurance premium deductions and dependent deductions can be handled at year-end adjustment, but the medical expense deduction is a tax-return-only deduction.
You can file by combining the expenses of everyone in a household that shares living expenses (including parents and children living apart).
Even for years you forgot to file, you can recover the tax with a refund claim within 5 years. If you still have the receipts, you can file even now.
※ If your total income is under ¥2 million, use "total income × 5%" instead of "¥100,000" (whichever is lower).
※ The deduction is capped at ¥2 million.
List of qualifying medical expenses
The test for "what qualifies" is "whether the spending is necessary for treatment or recuperation." Cosmetic and preventive purposes are generally not eligible.
- Consultation and treatment fees (both insured and self-pay care)
- Hospitalization fees (including meals) and surgery fees
- Acupuncture, moxibustion and massage (when directed by a doctor)
- Psychiatry and psychosomatic treatment fees
- Cosmetic plastic surgery
- Health checkups and full medical checkups (eligible if an abnormality is found and then treated)
- Vaccinations such as influenza shots
- Prescription medicine (dispensing pharmacy)
- Over-the-counter medicine (for treatment purposes)
- Compresses, fever reducers, stomach medicine, eye drops, etc.
- Vitamins and supplements
- Energy drinks (those that are not medicines)
- Medicines for health promotion or prevention
- Cavity treatment and periodontal treatment
- Implants (to restore chewing function)
- Orthodontics for children (when medically necessary)
- Dentures and bridges
- Whitening for cosmetic purposes
- Adult orthodontics purely to improve appearance
- Prenatal checkups, delivery fees, hospitalization fees
- Fertility treatment and in-vitro fertilization costs
- Postpartum outpatient costs
- Childbirth lump-sum grant (¥500,000) → subtract as a reimbursement
- Long-distance transport for giving birth at one's parents' home (by plane, etc.)
- Train and bus (no receipt needed; a record is fine)
- Taxi (when public transport cannot be used)
- An attendant's transport (when the patient cannot travel alone)
- Gasoline and parking costs for a private car
- Self-borne portion at a geriatric health-care facility
- Self-borne portion for home nursing and home rehabilitation
- The medical-equivalent portion (1/2) at a special nursing home for the elderly
- Meal and recreation costs at day-care services
Hospitalization benefits, surgery benefits, and refunds of high-cost medical care benefits are subtracted only from the corresponding medical expense. Even if the result is negative, you cannot deduct that shortfall from other medical expenses (that item is treated as ¥0). Even if a high-cost medical care benefit has not yet been received at filing time, any confirmed amount must be subtracted.
Calculating the deduction and refund
Refund simulation by income and tax rate
| Approx. annual income | Income tax rate | Deduction of ¥100,000 | Deduction of ¥300,000 | Deduction of ¥500,000 |
|---|---|---|---|---|
| up to ¥3.3 million | 5% | Income tax ¥5,000 ＋ residence tax ¥10,000 ＝ ¥15,000 total | Income tax ¥15,000 ＋ residence tax ¥30,000 ＝ ¥45,000 total | Income tax ¥25,000 ＋ residence tax ¥50,000 ＝ ¥75,000 total |
| ¥3.3–6.95 million | 20% | Income tax ¥20,000 ＋ residence tax ¥10,000 ＝ ¥30,000 total | Income tax ¥60,000 ＋ residence tax ¥30,000 ＝ ¥90,000 total | Income tax ¥100,000 ＋ residence tax ¥50,000 ＝ ¥150,000 total |
| ¥6.95–9 million | 23% | Income tax ¥23,000 ＋ residence tax ¥10,000 ＝ ¥33,000 total | Income tax ¥69,000 ＋ residence tax ¥30,000 ＝ ¥99,000 total | Income tax ¥115,000 ＋ residence tax ¥50,000 ＝ ¥165,000 total |
| ¥9–18 million | 33% | Income tax ¥33,000 ＋ residence tax ¥10,000 ＝ ¥43,000 total | Income tax ¥99,000 ＋ residence tax ¥30,000 ＝ ¥129,000 total | Income tax ¥165,000 ＋ residence tax ¥50,000 ＝ ¥215,000 total |
※ Income tax is refunded 3–4 weeks after filing. The residence tax reduction starts from June of the following year.
Rules for combining family expenses
- A spouse (regardless of income, including a full-time homemaker)
- Children (before becoming independent, including students)
- Parents and grandparents living with you
- Even parents living apart are recognized as "sharing living expenses" if you provide financial support such as remittances
- Where you send money to a child living apart
You are free to choose whose return the family's medical expenses go on. Filing under the person with the higher income tax rate yields a larger income tax refund. For a dual-income couple, combining them on the higher earner's return is generally more advantageous.
Self-Medication Tax System
You can choose this as an alternative to the ordinary medical expense deduction. It is advantageous in years when you rarely visit hospitals and mostly rely on over-the-counter medicine.
- Broadly covers hospitals, medicine, transport, etc.
- You can combine the whole family's expenses
- Deduction cap: ¥2 million
- Covers only switch OTC medicines
- You can combine the whole family's expenses
- Deduction cap: ¥88,000
- A health checkup is required (your company's regular checkup is fine)
Receipts and medicine packaging carry a "Self-Medication Tax System eligible" mark (a ★ symbol or the label "★Self-Medication Tax System eligible"). Representative products: Loxonin S, Gaster 10, Allegra FX, Claritin EX, Nicotinell, Voltaren EX Tape, and so on.
How to file the return
An employee filing a return solely for the medical expense deduction is treated as making a refund claim. You can file before the usual filing period (Feb 16 – Mar 15), and it is completed entirely on a smartphone with e-Tax.
Hospital counter receipts, pharmacy receipts, and notes on outpatient transport. Just drop them into an envelope for each month. Saving digital photos on your phone also works.
Issued by your company by the end of January. It shows your salary income and withheld tax and is needed to prepare the return.
Enter dates, hospital names and amounts into the National Tax Agency's "Medical Expense Summary Form" (Excel). Import it into the Tax Return Preparation Corner and enter the details from your withholding statement too. With a My Number card you can complete filing on a smartphone.
The income tax portion is transferred to your designated account 3–4 weeks after filing. The residence tax reduction is reflected over one year starting from June of the following year.
What you need
Issued by your company by the end of January. Check your salary income and withheld tax.
Keep a full year together (no need to attach, but you must retain them for 5 years).
Download from the National Tax Agency site. Can be imported into e-Tax.
Refund notices for hospitalization benefits and high-cost medical care benefits. Used to confirm reimbursements.
Used for e-Tax filing. Complete the filing with only a smartphone.
The account to receive the income tax refund. Check the account number in your passbook.
Common mistakes and cautions
This is wrong. A relative you support financially, such as through remittances, is recognized as "sharing living expenses," so you can combine their medical expenses even if they live apart. The same applies when you send money to a child living alone.
The checkup itself is not eligible, but if the checkup finds an abnormality and you then undergo treatment, the checkup cost is also eligible. And treatment costs for something flagged by a full medical checkup are, of course, eligible.
Claiming the medical expense deduction lowers your taxable income, so your Furusato Nozei deduction cap drops accordingly. When simulating your year-end Furusato Nozei limit, do so after factoring in the medical expense deduction. If you max out Furusato Nozei first, you may exceed the limit once the medical expense deduction is applied.
A hospitalization benefit is subtracted only from that hospitalization cost. Even if the result is negative, you cannot offset it against other medical expenses. Also, even if a high-cost medical care benefit is not yet received at filing time, any confirmed amount must be subtracted.
Train and bus fares used for outpatient visits can be claimed with a note even without receipts. A record such as "○○ Hospital: train fare ¥480 round trip × 8 visits ＝ ¥3,840" is accepted. Taxis require receipts.
A refund claim for the medical expense deduction can be filed anytime within 5 years (accepted even outside the filing period). For the 2020 tax year, until December 31, 2025. If you still have the receipts, you can file even now.
- □ Combined the medical expenses of everyone in the household sharing living expenses
- □ Recorded outpatient transport costs (train and bus)
- □ Subtracted reimbursements from hospitalization benefits and high-cost medical care benefits
- □ Excluded non-eligible costs such as cosmetic purposes and vaccinations
- □ Decided which spouse (the higher earner) files
- □ Checked the impact on Furusato Nozei
- □ Compared with the Self-Medication Tax System and chose the better option
More detail in related articles
How to calculate the medical expense deduction
From netting reimbursements to comparison with the Self-Medication Tax System.
Tax returns for employees
The medical expense deduction can't go through year-end adjustment. Filing steps.
Furusato Nozei guide
Cautions when filing it together with the medical expense deduction.
FAQ
From what amount can I use the medical expense deduction?
If your total income is ¥2 million or more, from medical expenses over ¥100,000 a year; if under ¥2 million, from expenses over 5% of your income.
Can family medical expenses be combined?
The medical expenses of family members who share living expenses can be combined, and it is advantageous for the person with the higher income tax rate to file them together.
Do employees also need to file a return?
Since the medical expense deduction cannot be received through year-end adjustment, you file a tax return yourself (a refund claim, allowed within 5 years).
Sources / official information
This article is based on the official information below. Rules may be revised; please check each official site for the latest details.
- National Tax Agency — Tax Answer No.1120 When you pay medical expenses (medical expense deduction) (in Japanese)
- National Tax Agency — Tax Answer No.1122 Medical expenses eligible for the deduction (in Japanese)
- Ministry of Health, Labour and Welfare — Self-Medication Tax System (switch OTC drug deduction) (in Japanese)
- National Tax Agency — Tax Return Preparation Corner (in Japanese)
※ This article is for general information only and is not tax or legal advice. For individual tax matters, consult your local tax office or a licensed tax accountant (zeirishi).