The rule itself: what NTA No.1900 actually says
If you are a salaried employee with one employer, and that employer withholds and settles your income tax in full through 年末調整 (nenmatsu chousei, year-end adjustment), you are normally excused from filing a 確定申告 (kakutei shinkoku, final tax return). But there's a condition attached: if your total income from sources other than salary and retirement income (給与所得・退職所得を除く各種の所得金額) exceeds ¥200,000 in a calendar year, that exemption disappears and you must file. This is National Tax Agency guidance No.1900, and it's worth reading precisely rather than as a rough rule of thumb — the wording matters more than most explanations suggest.
Three words that change everything: income, not revenue
The single most common misreading of this rule is confusing 収入 (shuunyuu, revenue) with 所得 (shotoku, income). The ¥200,000 threshold applies to income — what's left after subtracting the allowable expenses for that income category — not the gross amount that landed in your bank account. If you earned ¥350,000 from freelance side work but spent ¥180,000 on deductible expenses, your 所得 is ¥170,000, under the line. Sell the same side gig for ¥350,000 with no deductible costs, and you're over it. The math has to be done category by category, using each category's own rules, before you compare anything to ¥200,000.
It's a combined total, not per-source
The second detail people miss: the ¥200,000 is a sum across every non-salary, non-retirement income category combined — not a separate allowance for each one. ¥120,000 of 雑所得 (zatsu shotoku, miscellaneous income) from a side job plus ¥90,000 of crypto gains adds up to ¥210,000, which crosses the line even though neither source alone would. Rental income, freelance side gigs, stock or FX gains, and crypto profits (暗号資産, taxed as 雑所得 under NTA No.1524) all get added together before you check the threshold. Retirement income is the one explicit carve-out — it's excluded from this calculation entirely because it's taxed separately.
What typically counts
- Side-job or freelance income reported as 雑所得 or 事業所得
- Cryptocurrency (暗号資産) trading or staking gains
- Stock or FX trading gains held outside a 特定口座（源泉徴収あり）(a tax-withheld specified account) — gains inside that type of account are already settled at source and generally don't count toward this total
- Rental income from property you own
If you have two or more employers
The rule has a companion version for people juggling multiple jobs. If you have salary income from a job that isn't put through 年末調整 (typically a secondary or side job), and that non-adjusted salary plus any other non-salary income together exceeds ¥200,000, filing is required. There's a narrow low-income carve-out for some multi-job situations, but it's genuinely narrow — if this describes you, it's worth reading our first-year freelancer guide or getting a professional opinion rather than assuming you're exempt.
The catch almost nobody mentions: 住民税 doesn't care about ¥200,000
This is the part most guides skip, and it's the one that actually matters for most people reading this. The ¥200,000 exemption is an income-tax rule from the NTA — full stop. 住民税 (juuminzei, resident tax), which is administered by your city or ward office rather than the NTA, has no equivalent threshold. Earn ¥50,000 from a side gig and stay comfortably under the ¥200,000 line for income tax purposes, and you can still be required to file a 住民税申告 (resident tax declaration) with your municipality reporting that same income.
In practice, this means "I'm under ¥200,000, so I have nothing to do" is usually the wrong conclusion. What's actually true is narrower: you may not owe a national 確定申告, but you likely still owe your city a separate municipal filing. Filing a 確定申告 solves both problems at once — the return is automatically forwarded to your municipality and covers income tax and resident tax together. Skip the 確定申告 because you're under the threshold, and silence does not solve the resident-tax side; you generally still need to contact your local city or ward office directly. For a broader walkthrough of when filing is required at all, see whether you need to file.
Common mistakes
- Assuming being under ¥200,000 means there's nothing left to do — the municipal 住民税申告 obligation typically remains
- Comparing gross revenue (収入) to ¥200,000 instead of income after expenses (所得)
- Checking each income source against ¥200,000 separately instead of adding them all together
- Forgetting that gains inside a 特定口座（源泉徴収あり）are treated differently from gains outside one
- Applying this salaried-employee rule to a situation involving public pension income or non-resident status, where different rules apply
Who this rule doesn't cover
This explanation assumes a standard case: a 居住者 (resident taxpayer) with one main employer handling 年末調整. Non-residents and people receiving public pension income are governed by different provisions entirely, and shouldn't try to map this rule onto their situation. If either applies to you, that's a case for a tax professional rather than a general guide. It's also worth noting that none of this is tax advice — it's a plain-language walkthrough of published NTA guidance, and your specific numbers can change the outcome. If you're also weighing furusato nozei donations against a filing decision, our furusato and filing guide covers how the two interact, and our FAQ has quick answers to related questions.
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