Does Japan have a statutory severance formula?

No. Japanese law sets no minimum retirement allowance. Each company defines taishokukin (退職金) in its own work rules (就業規則), often as base salary times a payment-rate multiplier that grows with tenure, times a coefficient that is higher for company-initiated retirement than for resignation. This tool uses a common illustrative table; your employer's plan is the real authority.

How is the multiplier related to years of service?

Most plans pay nothing under about three years, then increase the multiplier steadily — roughly 1.5x base salary at a few years, rising to 30–50x at 30+ years. Longer service is rewarded disproportionately, which is why mid-career changes can forfeit substantial accrued allowance.

Why is retirement pay taxed so lightly in Japan?

Retirement income gets a large deduction (退職所得控除) of ¥400,000 per year for the first 20 years and ¥700,000 per year beyond that, with a minimum of ¥800,000. Only half of the amount above the deduction is taxable (the ½ rule), and progressive income-tax rates then apply. This makes a lump-sum retirement payout far more tax-efficient than ordinary salary.

What does the reason for leaving change?

Company-initiated retirement (mandatory age, redundancy or contractual retirement) usually pays the full scheduled amount, while voluntary resignation commonly pays a reduced figure — often around 80% in typical plans. This tool applies a reason coefficient to reflect that difference.

Is the tax figure exact?

No. It applies the national progressive income-tax table to the ½ taxable retirement income for an indicative figure. It excludes the 2.1% special reconstruction surtax and local inhabitant tax, and it assumes the standard separate-taxation treatment. Confirm with your payroll office or a tax accountant.

Japan Gratuity / End-of-Service Calculator

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A Japan retirement allowance calculator that estimates your 退職金 (taishokukin) from base salary, years of service and reason for leaving — then shows the unusually favourable retirement-income tax treatment that applies to lump-sum payouts in Japan.

How it works

There is no statutory severance formula in Japan, so the most common company model is used:

gross = base monthly salary × payment-rate multiplier(tenure) × reason coefficient

The multiplier grows with tenure (typically nil under 3 years, rising to 30–50x base salary at 30+ years), and the coefficient is 1.0 for company-initiated retirement versus about 0.8 for voluntary resignation.

The payout is then taxed under the retirement-income rules:

Deduction (退職所得控除) = ¥400,000 × years for the first 20 years, plus ¥700,000 × (years − 20) beyond that, with a ¥800,000 minimum.
Taxable income = (gross − deduction) / 2 — only half the excess is taxed.
The national progressive income-tax table is applied to that amount.

Example and notes

A worker with a ¥350,000 base salary and 20 years of company-initiated service has a 14x multiplier, giving a gross allowance around ¥4,900,000. The retirement-income deduction is ¥8,000,000, which exceeds the payout, so the taxable income is ¥0 and no income tax is due — a clear illustration of how lightly retirement lump sums are taxed.

This is indicative only. The multiplier table is illustrative, and the actual amount depends entirely on your employer’s work rules. The 2.1% reconstruction surtax and local inhabitant tax are not included. All figures are computed locally in your browser.