Living in Japan

What is the cost of living and working in Tokyo?

In this article we will look at average salaries, expected taxes, deductions, rent, food and utilities costs for living in Tokyo.

Living and working in Japan can be a great experience. Some take that experience back home with them, and some find a whole new life through it. One question that many who are on the fence worry over is, “Can I afford to live in Japan?”. Whilst Japan has a reputation for being an expensive country, the answer is actually “Yes, and quiet comfortably too!”. The key thing that you need to realize is that while Japan can be rather expensive for tourists, as a resident things become much more manageable.
Today we are going to look at average salaries, expected taxes and other deductions, rent, food and utilities. We can therefore get an idea of the kind of money you will be able to live and work in Japan. Everyone is different, and some people like to spend more than others. Read on to get a good idea on whether living and working in Japan is right for you.

Average Japanese Salary, Before and After Tax

Salaries are fairly simple to understand in Japan, because wages are more based on experience than the particular field (within reason). Whilst the median salary is a very livable 545,000 JPY per month, the data for foreigners is a little bit different. Let’s look at average salaries for 2020.

Industry Average annual income (万円)*
Age 20s 30s 40s 50s Male av. Female av.
Maker 372 477 553 705 492 366
Finance General 372 532 581 716 540 370
General Trading Company 367 500 538 867 487 376
IT/Communication 370 498 599 716 471 386
Medical 346 442 540 694 510 357
Construction/Factory/Real estate 367 453 501 551 451 349
Internet/Advertising/Media 352 446 518 579 448 364
Specialized Trading Company 347 437 522 619 443 343
Services 326 403 443 476 405 328
Retail/Restaurant 308 384 449 496 390 309

*万=10,000. Therefore 372万円 is 3720000 yen.

Source 1: https://doda.jp/guide/heikin/gyousyu/


As for English teaching positions, average salaries are as follows.

Eikaiwa ¥250,000/month
ALT – direct hire ¥250,000/month
ALT – contract company ¥250,000/month
University & Int. Schools ¥300,000 ~ ¥600,000/month

Income tax in Japan falls into the following brackets:

Annual Taxable Income Tax Rate
< ¥1,950,000 5%
¥1,950,000 – ¥3,300,000 10%
¥3,300,000 – ¥6,950,000 20%
¥6,950,000 – ¥9,000,000 23%
¥9,000,000 – ¥18,000,000 33%
> ¥18,000,000 40%

On top of your income tax, you also pay a residence tax in Japan. This tax is paid according to where you live, and each city is slightly different. It ranges from 5 percent to 10 percent of your taxable income. Finally you will also need to pay a pension and health insurance. As a full time worker these should be deducted from your salary. Health insurance equates to another 10 percent of your salary, and the pension is also around 10 percent.

In the 1,950,000 to 3,300,000 taxable income range, you are therefore looking at receiving around 60% of your salary after taxes and insurance payments.

Cost of Living Expenses

The following data was found by the statistics bureau of Japan, showing the average monthly expenses for a single resident household in 2020.

Food ¥38,257
Furniture and Housewares ¥5,293
Light, heat and water ¥11,686
Residence (rent, maintenance etc.) ¥20,948
Clothing and footwear ¥4,692
Health care (medicine etc.) ¥7,029
Transportation ¥2,633
Car expenses ¥8,298
Communication expenses (phone etc.) ¥7,286
Education ¥0
Cultural entertainment ¥15,452
Hairdressing and care ¥4,802
Personal belongings ¥903
Tobacco ¥1,562
Other expenses ¥6,576
Excess entertainment expenses​ ¥12,934
Total expenditures ¥148,351

Source: https://www.stat.go.jp/english/data/tanshin/et20.html

As is always the case with statistical data, your situation will be somewhat different (for example nonsmokers will not have a tobacco expense). However this data is a better indication of the monthly cost of living in Japan, if you intend to live like a local. Expat focused data will show a higher cost of living, because it generally assumes higher wages and a certain non standard lifestyle.

Personally I am surprised at the rent of 20,000 yen in this data. In more rural areas you can certainly find such apartments, but in any city you should expect to pay 50,000 yen or more. The average rent for a studio apartment in Tokyo is about 90,000 yen!

Example Case Study

By far the most common job for foreigners from English speaking countries is English teaching. The average English teaching salary is ¥3.21 million yen, or ¥267,500 a month. Let’s take a look at what kind of financial situation this would place you in.

Yearly Monthly USD
Salary ¥3,200,000 ¥266,667 $2,528
Insurance / Pension – ¥451,200 – ¥37,600 $356
Income Tax – ¥62,700 – ¥5225 $50
Resident Tax – ¥122,800 – ¥10,233 $97
Net Income ¥2,563,300 ¥213,608 $2,025

Taking the cost of living expenses of ¥148,351 from a net income of ¥213,608 you could pocket ¥65,257 each month. That’s not half bad at all! Assuming a more realistic rent of ¥50,000, that’s still ¥35,257 in savings each month.

English teaching salaries tend to be rather static, but other career industries usually have yearly set raises and bonuses. Many of the positions advertised on Jobs in Japan will have such upward momentum, so if you would like greater financial freedom it’s a good idea to regularly check their job postings. It pays to be proactive about your employment in Japan!

I hope this data will help you make an informed decision on whether you can afford to live in Japan. Everyone’s situation is different, but working and living in Japan is by no means financially difficult, if you live like a local.

Currently living the good life on my little farm in the mountains of Japan. I grow my own rice and vegetables, and try to avoid doing things I don't enjoy! I figure this is the best way to live life. I enjoy writing every day, sometimes songs, sometimes bedtime stories for my daughter, and sometimes articles about Japan.

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