5 'Tax-Saving' Habits That 70% of Employees Are Missing Out On | How to Increase Your Take-Home Pay Starting Today

Have you resigned yourself to the taxes deducted from your monthly salary as something that 'can't be helped'? Just having the right knowledge can change your annual take-home pay by tens of thousands to hundreds of thousands of yen. Here, I will explain five specific tax-saving habits you can start practicing today.

# 1. Use iDeCo to make your contributions fully tax-deductible

With iDeCo (Individual-type Defined Contribution pension plan), your contributions are fully tax-deductible.

For example, if an employee with an annual income of 5 million yen contributes 20,000 yen per month to iDeCo, 240,000 yen is deducted from their taxable income annually. If the combined income and resident tax rate is approximately 20%, this calculates to a tax saving of about 48,000 yen per year.

Furthermore, investment gains are tax-free. You can also use deductions when you receive the funds after age 60. It is a two-birds-one-stone system that allows you to save for retirement while reducing your current taxes.

For employees, the monthly limit varies depending on whether your workplace has a corporate pension plan (e.g., 23,000 yen without a corporate pension, 12,000 yen with one). Start by checking your personal limit on the official website of the National Pension Fund Association.

📦 Basic knowledge of iDeCo and investment trusts

# 2. Use Furusato Nozei (Hometown Tax) to get gifts while saving on taxes

Furusato Nozei is a system where you can reduce your resident and income taxes by making donations to local governments. The out-of-pocket cost is generally only 2,000 yen.

For an employee with an annual income of 5 million yen (single, no dependents), the deduction limit is approximately 60,000 yen. This means you can receive 60,000 yen worth of return gifts (such as rice, beef, seafood, or daily necessities) for a net cost of only 2,000 yen.

You can find your deduction limit in 5 minutes by using a 'deduction limit simulator' on portal sites (like Satofull, Furunavi, etc.). If you choose the one-stop special application, you don't even need to file a tax return.

Many people say they 'meant to do it' but never do it each year. Open the simulator right now.

📦 A Practical Guide to Hometown Tax Donations and Tax Savings

# 3. Maximize Your Life Insurance Premium Deduction

There are three types of life insurance premium deductions.

・General life insurance premium deduction (death insurance, etc.)

・Nursing care and medical insurance premium deduction (medical/cancer insurance, etc.)

・Individual pension insurance premium deduction (individual pension insurance)

If you have all three, you can receive a deduction of up to 120,000 yen for income tax and up to 70,000 yen for resident tax.

Every year between October and November, you will receive a 'deduction certificate' from your insurance company. Just submit this to your company along with your year-end adjustment documents. If you have thrown it away, request a reissue.

Surprisingly, many people do not have the insurance premiums they pay reflected in their deductions. Make sure to check this during this year's year-end adjustment.

# 4. Recover Medical Expenses Through Your Tax Return

If the total medical expenses for you and your dependents exceed 100,000 yen during the one-year period from January 1st to December 31st, you can receive a medical expense deduction by filing a tax return.

Eligible items:

・Payments at hospitals, dental clinics, and pharmacies

・Costs for prescription medication

・Transportation costs for hospital visits (train/bus)

・Long-term care service costs

Note that any amount covered by insurance must be deducted. Also, over-the-counter drugs are not eligible (they are covered separately under the Self-Medication Tax System).

Since you can calculate expenses for the whole family together, it is advantageous for dual-income couples to file under the name of the spouse with the higher income.

Keep your receipts throughout the year. You can complete your tax return from home using e-Tax.

📦

# 5. Correctly Record Expenses for Your Side Hustle

If you have miscellaneous income (or business income) from a side job, you can deduct expenses incurred for that work.

Items recognized as expenses (including prorated amounts):

・Smartphone costs (portion used for side work)

・Internet communication fees (portion for home use)

・Costs for books and information products

・Seminar participation fees and transportation costs related to side work

・Cloud service subscription fees

Some people are afraid to claim expenses, but recording items actually used for business is legal and a natural right. Do not throw away a single receipt or invoice; keep them organized in a folder.

If your annual income from a side job exceeds 200,000 yen, you must file a tax return. By claiming expenses at that time, you can reduce your taxable income.

Even if your side income is small, accumulating expenses will increase your tax savings. Start the habit of keeping records today.

# Summary | Only those who take action benefit

Tax saving is a legal way to 'increase your take-home pay.' Just knowing this can create a difference of tens of thousands to hundreds of thousands of yen every year, even with the same salary.

Action for today:

・Check the contribution limits for iDeCo on the official website

・Find your maximum contribution amount using a Furusato Nozei simulator

・Check your insurance deduction certificates right now

There is nothing difficult about it. It just comes down to whether you do it or not.

On this account, I share one useful tip every day for men in their 30s to 50s. You won't regret following.