US taxes for Americans in Japan

Front-loaded answerFor your first five years in Japan you're a non-permanent resident, taxed only on Japan-source income and any foreign income you remit into the country — keep offshore income in US accounts and Japan won't tax it. At year five, worldwide taxation begins. You always file a US return; the US–Japan treaty and the Foreign Tax Credit keep you from being taxed twice.

The non-permanent-resident 5-year rule

If you haven't had a domicile or residence in Japan for more than five of the last ten years, you're a "non-permanent resident" — taxed on Japan-source income plus foreign-source income remitted to Japan. Foreign income kept entirely abroad is exempt. This is Japanese domestic law, not a treaty provision, and it's the status most Americans hold for their first five years.

• !Years 1–5: Japan taxes Japan-source income + foreign income you remit in
• !Keep dividends/rents/investments in US accounts and don't remit them → no Japanese tax on them
• !Year 5 onward: Japan taxes your worldwide income (Foreign Tax Credit available)

Rates, the treaty, FEIE & FBAR/FATCA

Japanese national income tax is progressive 5%–45%, plus roughly 10% local inhabitant tax, so effective top rates near 55%. A US–Japan income tax treaty exists (with the usual saving clause letting the US tax its citizens), and the Foreign Tax Credit is the main tool against double tax. The FEIE excludes earned income up to $130,000 (2025) / $132,900 (2026); Japanese accounts trigger FBAR and FATCA.

Frequently asked

When does Japan start taxing my worldwide income?

Once you've had a domicile or residence in Japan for more than five of the last ten years, you become a permanent resident for tax purposes and Japan taxes your worldwide income. Before that, as a non-permanent resident, only Japan-source income and remitted foreign income are taxed.