A lot of foreign instructors hit their second year in Japan and notice their paycheck is smaller than it was twelve months ago. Same base salary, same job, less money. Nobody warned them this was coming.
Here is what is actually happening.
The deductions you barely noticed in year one are about to get real
In your first year, you were most likely on National Health Insurance (Kokumin Kenko Hoken) — the basic public plan. Monthly payments were probably around ¥5,000, sometimes less, depending on your income declaration. Many newly arrived instructors also qualified for a pension exemption. The deductions felt manageable because, frankly, they were.
Once you enroll in your company’s Social Insurance (Shakai Hoken), health insurance and the employees’ pension get bundled into one mandatory deduction — typically around ¥30,000 per month. For most instructors, that is the moment the payslip starts looking unfamiliar.
Before you conclude the company is taking your money
The ¥30,000 disappearing from your paycheck every month is frustrating to look at. I have had this conversation more times than I can count, usually from an instructor who has just received their first Shakai Hoken payslip and is convinced something has gone wrong.
What most people do not realise is that your employer matches your contribution yen for yen. While ¥30,000 leaves your paycheck, your company puts in another ¥30,000 on top. That is ¥60,000 per month going into your coverage — you are only seeing half the picture.
There is also a pattern worth knowing about. The school year in Japan runs March to May with graduation and entrance ceremonies — a busy stretch where many instructors work longer hours and earn more that month. Because social insurance premiums are calculated based on your April salary, a few months of higher earnings can quietly push your premium into the next bracket. Your base salary has not changed, but your deduction has. I field confused calls about this every year, usually around June, from instructors who cannot figure out why their insurance suddenly costs more.
The coverage itself is meaningfully better than the basic plan. I had one instructor — genuinely one of the most conscientious people I have worked with — who became seriously ill in Japan and needed treatment that would have been financially devastating. Because of how she had conducted herself over the years, the company’s president personally covered her treatment costs and continued her living expenses for the months she could not work. That is not something you can put in a contract or guarantee in advance. But it is also not a coincidence that it happened to her specifically.
The delayed bill that arrives in June
Japan’s Inhabitant Tax (Juminzei) is calculated based on your income from the previous year and billed the following June. In practical terms, your first year in Japan feels almost tax-free. Then a notification arrives in the post in June of year two and the reality sets in.
The timing is what gets people. Shakai Hoken kicks in and Inhabitant Tax arrives within the same few months. Together they account for most of that ¥30,000–¥40,000 monthly drop. And if you happened to work extra hours during the busy spring term, your insurance premium may have gone up at the same time. It all lands at once.
Budget for it before June of your second year. If you are approaching a contract renewal before then, factor it into any salary conversation — a base increase that does not account for year-two deductions is not really an increase at all.
Where the money goes after that
Once you have a handle on what Japan is taking out, the next question is what you are doing with what is left. For most instructors sending money home, the answer is: more than necessary is going to the bank in fees.
Japanese banks charge ¥3,000 or more per international transfer, plus a further 2–3% margin buried in the exchange rate. On a regular monthly transfer, that adds up to real money over the course of a year.
→ How to Stop Losing ¥5,000 Per Transfer When Sending Money Home
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