Japan’s 2025 tax reform introduces changes to individual income tax, dependent deductions and withholding requirements, with most personal tax measures taking effect from 1 December 2025 and updated employment income withholding tables from 1 January 2026. These changes will affect payroll processing, year-end adjustments and assignment planning for globally mobile employees. This update sets out the key points payroll and mobility teams need to manage compliance and ensure accurate processing for 2025 and year-end activities.
Key Changes for Employees
Impact on Payroll
Employees must submit updated declarations for dependents and specified relatives to benefit from the revised deductions during the 2025 year-end adjustment. Payroll systems should be updated to reflect the new deduction levels and prepare for the revised withholding rules from January 2026.
Considerations for Global Mobility
Practical Steps for Employers
Japan - Global Insights
For further detailed guidance on payroll, employment law, and compliance in Japan, visit our Japan Global Insights on the activpayroll website.
Next Steps
For more information on Japan’s 2025 tax reform, please get in touch. Complete our Contact Us form, and a member of our expert team will be happy to assist with your queries.
