iDeCo and Your Monthly Take-Home in Japan (2026)

Last updated: 6 October 2026 · figures for the 2026 tax year (令和8年分)

Whether iDeCo (個人型確定拠出年金, the individual defined-contribution pension) changes your monthly take-home depends only on how you pay: from your own bank account the payslip stays exactly as it was, and through payroll the income tax on every payslip drops at once. For an employee on ¥400,000 a month in Tokyo putting in ¥23,000 a month, that cuts ¥14,100 off the year’s income tax and ¥27,600 off the following year’s resident tax either way — from your own account that comes back as a larger refund in December and a smaller resident tax from June. From December 2026 the monthly limit for most employees rises from ¥23,000 to ¥62,000.

Why it is deducted in full

iDeCo contributions count as 小規模企業共済等掛金 in the tax law, and the National Tax Agency states that the deduction is the full amount you paid in the year. Resident tax gives the same deduction (地方税法 第314条の2). It is not a credit and there is no percentage: the whole contribution comes off the income that tax is charged on, so what it saves depends on your tax bands.

Paid from your own account

If you pay from your own bank account (個人払込), your employer knows nothing about it, so the monthly withholding does not change. At the end of the year you hand the contribution certificate to your employer with the Application for Deduction for Insurance Premiums (保険料控除申告書) for the year-end adjustment (年末調整), and the whole year’s saving on income tax comes back in December’s pay. The resident-tax saving comes later still: resident tax is charged on last year’s income, so it shows up in the bill that starts the June after.

Paid through payroll

Some employers take the contribution out of pay (事業主払込). Then the income tax law treats it like a social insurance premium for withholding: the monthly table is read on your pay after the contribution comes off (所得税法 第188条). The tax on each payslip drops from the first month. The table only approximates the year, so December still settles the difference.

What it does on ¥400,000 a month

On ¥400,000 a month in Tokyo, no bonus, aged 30, with ¥23,000 a month going into iDeCo — ¥276,000 for the year — the engine behind the calculator on this site gives:

Either way the year’s income tax falls by ¥14,100 and the following year’s resident tax by ¥27,600 — ¥41,700 in all on ¥276,000 put away. Through payroll the monthly withholding drops by ¥1,960, which adds up to more than the year’s saving, so the December refund is smaller to make up for it. The December refund without iDeCo is unusually large in 2026 anyway: the year’s higher deductions are applied only in December.

Paid from your own account, the payslip is the same as without iDeCo and the ¥23,000 leaves from your bank instead. Through payroll, each payslip is ¥21,040 lighter: ¥23,000 goes to iDeCo and ¥1,960 less income tax is withheld.

The resident-tax part, month by month

The ¥27,600 arrives as a smaller deduction on every payslip of the following June-to-May run. Resident tax collected by your employer is split into twelve, each instalment rounded down to ¥100 and the remainder added to June. On these figures the monthly instalment falls from ¥18,900 to ¥16,600, and June’s from ¥19,200 to ¥16,900. That is the part of iDeCo that does show on a payslip whichever way you pay — a year later.

It also means the first year looks thin if you have just arrived. Somebody who starts iDeCo in their first year in Japan has no resident tax to reduce until the first June bill arrives, so for the first months the only saving is the December one.

The December 2026 increase

The Ministry of Health, Labour and Welfare announces that from December 2026 the monthly limit for an employee whose company has no company pension rises from ¥23,000 to ¥62,000, contributions can continue until age 70, and the deduction works as before. Where the company does have a company pension, the limit is set together with what the employer contributes: its leaflet puts the combined ceiling at ¥62,000, and what is left for iDeCo depends on your plan. Ask your employer or your plan’s provider for your own figure rather than assuming it.

The deduction follows what you paid in the calendar year. When a December contribution is actually taken from your account decides which year it counts in, so check the debit dates on your plan’s statement.

What the calculator does not include

The calculator on this site has no iDeCo field: its figures are for a salary with no deductions you claim yourself, so with iDeCo your income tax and resident tax are lower than it shows by roughly the amounts above. The table here is the same engine with the contribution added.

Questions people ask

Why did my payslip not change after I started iDeCo?

Because you pay it from your own bank account. Your employer does not know about it until you hand in the contribution certificate for the year-end adjustment, so the tax saving arrives in December and the resident-tax saving from the following June.

Is the December 2026 increase automatic?

The higher limit is; your contribution is not. It stays at what you chose until you change it with your plan’s provider.

Does iDeCo lower my social insurance?

No. Health insurance and pension premiums are set on your pay before anything else comes off, and iDeCo is not part of that calculation. It lowers income tax and resident tax only.

This is a general explanation, not financial advice. The figures use 2026 tax rules, 協会けんぽ rates for Tokyo, and no other deductions. The basic exemption’s extra amounts are set for 2026 and 2027; from 2028 they are smaller, so the savings in later years differ.

Sources

• National Tax Agency — No.1135 小規模企業共済等掛金控除 [令和8年4月1日現在法令等] (iDeCo contributions are deductible in full for the year they are paid, claimed at the year-end adjustment or on a return). Japanese.
• Ministry of Health, Labour and Welfare — iDeCoがパワーアップします! (the limits from December 2026 and contributions to age 70). Japanese leaflet.
• Income Tax Act (所得税法) 第188条 — contributions deducted from pay come off before the withholding table is read. Local Tax Act (地方税法) 第314条の2 — the same deduction for resident tax.

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