Taxing Wages 2018

Japan

Abstract

This chapter includes data on the income taxes paid by workers, their social security contributions, the family benefits they receive in the form of cash transfers as well as the social security contributions and payroll taxes paid by their employers. Results reported include the marginal and average tax burden for eight different family types.

Methodological information is available for personal income tax systems, compulsory social security contributions to schemes operated within the government sector, universal cash transfers as well as recent changes in the tax/benefit system. The methodology also includes the parameter values and tax equations underlying the data.

 

 

The national currency is the Yen (JPY). In 2017 JPY 112.18 was equal to USD 1. In that year, the average worker is assumed to earn JPY 5 201 391 (Secretariat estimate). In Japan, the central government income tax year is a calendar year and the local government income tax year is from April to March. The calculations in this report are based on the tax rules and rates, which are applicable the 1 April.

1. Personal income tax systems

1.1. Central government income tax

1.1.1. Tax unit

Each individual is taxed separately.

1.1.2. Allowances and tax credits

1.1.2.1. Standard reliefs

• Basic allowance: a taxpayer may deduct JPY 380 000 as a basic allowance from his or her income.

• Allowance for spouse: a tax allowance up to JPY 380 000 is given to a resident taxpayer lives with a spouse whose income does not exceed JPY 380 000.

• Allowance for elderly spouse: a tax allowance up to JPY 480 000 is given to a resident taxpayer

  • who lives with a spouse of 70 years old and over, whose income does not exceed JPY 380 000,

  • instead of the allowance for spouse mentioned above.

• Special allowance for spouse: a tax allowance up to the amount shown in the following table is given to a resident taxpayer whose income does not exceed JPY10 000 000 and who lives with a spouse:

 

Spouse’s income JPY	Amount
0-380 000	0
380 000-400 000	380 000
400 000-450 000	360 000
450 000-500 000	310 000
500 000-550 000	260 000
550 000-600 000	210 000
600 000-650 000	160 000
650 000-700 000	110 000
700 000-750 000	60 000
750 000-760 000	30 000
760 000 or more	0

• Allowance for dependents: if a resident taxpayer has dependent children or other dependent relatives who are 16 years old and over, whose income does not exceed JPY 380 000, a tax allowance of JPY 380 000 per each dependent is given to the taxpayer.

• Special allowance for dependents: if a resident taxpayer has dependents between 19 and 22 years old whose income does not exceed JPY 380 000 and who live with the taxpayer, an allowance of JPY 630 000 is given for each dependent, instead of the allowances for dependents mentioned above.

• Allowance for elderly dependent: if a resident taxpayer has dependents who are 70 years old and over whose income does not exceed JPY 380 000, a tax allowance of JPY 480 000 per each dependent is given to the taxpayer, instead of the allowances for dependents mentioned above. (If the dependents are lineal ascendance of the taxpayer or his/her spouse, and permanently live with the taxpayer or his/her spouse, a tax allowance of JPY 580 000 per each dependent is given to the taxpayer.)

• Deduction for social insurance premiums: the whole amount of social insurance premiums for a resident taxpayer or his/her dependents shall be deducted from his/her income.

• Employment income deduction: the following amounts may be deducted from employment income in calculating salary income:

  • If gross employment income (GEI) does not exceed JPY 1 800 000, the deduction is 40% of GEI, but the minimum amount deductible is JPY 650 000.

  • If gross employment income exceeds JPY 1 800 000, but not JPY 3 600 000, the deduction is JPY 180 000 plus 30% of GEI.

  • If gross employment income exceeds JPY 3 600 000, but not JPY 6 600 000, the deduction is JPY 540 000 plus 20% of GEI.

  • If gross employment income exceeds JPY 6 600 000, but not JPY 10 000 000, the deduction is JPY 1 200 000 plus 10% of GEI.

  • If gross employment income exceeds JPY 10 000 000, the deduction will be fixed at JPY 2 200 000.

1.1.2.2. Main non-standard tax reliefs applicable to an AW

• Credit for housing loans: A resident taxpayer who constructs, purchases, enlarges or rebuilds a house and finances the cost by means of a housing loan and uses the property as his or her own dwelling is entitled to an income tax credit up to the amount described below for 10 years [or 15 years] after the first use of the house, provided that the floor space is not less than 50m2 and that at least half of the floor space is used as the owner-occupied dwelling. The tax credit is calculated based on the remaining housing loan debt amount and the years which the taxpayer has lived in the house. The loan can consist not only from private financial institutions but also from public institutions. This tax credit cannot be claimed by those whose total income is more than JPY 30 million.

The rates of the tax credits correspond to the year in which residence in the house commenced. The rates are as follows:

 

Residence starts:	From 1 January 2007 to 31 December 2007	From 1 January 2008 to 31 December 2008	From 1 January 2009 to 31 December 2010
Tax Credit Rate	For the part ofremaining housing loan balance within JPY 25 million: The R.H.L.B. × 1.0%[or 0.6%] (for first 6 years [or 10 years]) The R.H.L.B. × 0.5%[or 0.4%] (for last 4 years [or 5 years])	For the part of R.H.L.B. within JPY 20 million: The R.H.L.B. × 1.0%[or 0.6%] (for first 6 years [or 10 years]) The R.H.L.B. × 0.5%[or 0.4%] (for last 4 years [or 5 years])	For the part of R.H.L.B. within JPY 50 million: The R.H.L.B. × 1.0%
Maximum tax credit amount (for each year)	JPY 250 000 [or 150 000] (for first 6 years[or 10 years]) JPY 125 000 [or 100 000] (for last 4 years [or 5 years])	JPY 200 000 [or 120 000] (for first 6 years[or 10 years]) JPY 100 000 [or 80 000] (for last 4 years [or 5 years])	JPY 500 000
Maximum tax credit amount (for the deductible period in total)	JPY 2 million	JPY 1.6 million	JPY 5 million
Residence starts:	From 1 January 2011 to 31 December 2011	From 1 January 2012 to 31 December 2012	From 1 January 2013 to 31 March 2014
Tax Credit Rate	For the part of R.H.L.B. within JPY 40 million: The R.H.L.B. × 1.0%	For the part of R.H.L.B. within JPY 30 million: The R.H.L.B. × 1.0%	For the part of R.H.L.B. within JPY 20 million: The R.H.L.B. × 1.0%
Maximum tax credit amount (for each year)	JPY 400 000	JPY 300 000	JPY 200 000
Maximum tax credit amount (for the deductible period in total)	JPY 4 million	JPY 3 million	JPY 2 million

 

Residence starts:	From 1 April 2014 to 31 December 2021
Tax Credit Rate	For the part of R.H.L.B. within JPY 40 million: The R.H.L.B × 1.0% If the rate of tax(consumption tax etc.) included in the amount of cost etc. of housing is other than 8% or 10%; For the part of R.H.L.B. within JPY 20 million: The R.H.L.B × 1.0%
Maximum tax credit amount (for each year)	JPY 400 000 If the rate of tax(consumption tax etc.) included in the amount of cost etc. of housing is other than 8% or 10%; JPY 200 000
Maximum tax credit amount (for the deductible period in total)	JPY 4 million If the rate of tax(consumption tax etc.) included in the amount of cost etc. of housing is other than 8% or 10%; JPY 2 million

• Deduction for life insurance premiums: If a resident taxpayer pays insurance premiums on life insurance contracts and the beneficiary is the taxpayer, his/her spouse or other relatives, the portion of these insurance premiums which does not exceed the limit described below, is deductible from ordinary income, retirement income or timber income.

• In addition, if a resident taxpayer pays insurance premiums for “qualified private pension plan (insurance type)”, and the recipient of the pension payment is the taxpayer or his/her spouse or relatives living with the taxpayer, the portion of such premiums which does not exceed the limit described below, is deductible from ordinary income, retirement income, or timber income.

• Furthermore, if a resident taxpayer pays insurance premiums on nursing and medical insurance contacts and part of the nursing/medical care which the taxpayer receives is financed by the insurance, the portion of such premiums which does not exceed the limit described below, is deductible from ordinary income, retirement income, or timber income.

 

Annual premium paid (JPY)		Deduction
Over	Not over
	20 000	Total amount of premiums paid (1)
20 000	40 000	(1) × 1/2 + JPY 10 000
40 000	80 000	(1) × 1/4 + JPY 20 000
80 000	–	JPY 40 000

• For insurance contracts made on or after 1 January 2012 the maximum total deduction is JPY 120 000. A resident taxpayer can claim the deduction up to JPY 40 000 for life insurance premiums, private pension plan premiums and nursing and medical insurance premiums respectively.

• For the insurance contracts made on or before 31 December 2011, a resident taxpayer can claim the deduction up to JPY 50 000 for life insurance premiums, personal pension plan premiums respectively. Thus, a resident tax payer can claim the deduction up to JPY 100 000 in total.

• Deduction for medical expenses: If a resident taxpayer pays bills for medical or dental care for himself/herself or for his/her dependent spouse or other dependent relatives living with him/her and the amount of such expenses (excluding those covered by insurance) exceeds JPY 100 000 or 5% of the total of his/her ordinary income, retirement income and timber income, the excess amount is deductible from his/her ordinary income, retirement income or timber income. The maximum deduction is JPY 2 million.

If a resident taxpayer who receives health checks, vaccinations, etc., pays bills for switch OTC drugs for himself/herself or for his/her spouse or other relatives dependent on him/her from 1 January 2017 to 31 December 2021, amount of such expenses (excluding those recovered by insurance) exceeding JPY 12 000 is deductible from taxpayer’s ordinary income, retirement income or timber income. This is an alternative to the deduction for medical expenses mentioned above and the maximum deduction is JPY 88 000.

• Deduction for earthquake insurance premiums: Earthquake insurance premiums up to JPY 50 000 can be deducted from income. Although the income deduction for casualty insurance premiums are basically abolished, the deduction for long-term casualty insurance premiums remains available if contracted before 31 December, 2006. The maximum deduction for long-term casualty insurance premiums is JPY 15 000. If an individual applies for a deduction for both earthquake insurance premiums and long-term casualty premiums, the maximum deductible amount is JPY 50 000 in total.

1.1.3. Tax schedule

 

Taxable income (JPY)*		Tax rate (%)	Deductible amounts for each bracket (JPY)
Over	Not over	(A)	(B)
	1 950 000	5	-
1 950 000	3 300 000	10	97 500
3 300 000	6 950 000	20	427 500
6 950 000	9 000 000	23	636 000
9 000 000	18 000 000	33	1 536 000
18 000 000	40 000 000	40	2 796 000
40 000 000		45	4 796 000

* The fraction of taxable income that is less than JPY 1 000 is rounded down.

Tax liability is obtained by multiplying the taxable income by tax rate (A) and deducting the amount (B). For example, income tax due on taxable income of JPY 7 million is:

7 000 000 × 0.23 (A) – 636 000 (B) = JPY 974 000.

In addition, a taxpayer is required to file tax returns and make tax payments for additional 2.1% of the base income taxes from 2013 through 2037 (special income tax for reconstruction) annually together with the regular income tax of respective years.

1.2. Local taxes (personal inhabitant’s taxes)

1.2.1. General description of the system

Local taxes in Japan (personal inhabitant’s taxes) consist of prefectural inhabitant’s tax levied by prefectures and municipal inhabitant’s tax levied by cities, towns and villages. The prefectural inhabitant’s tax is collected together with the municipal inhabitant’s tax by cities, towns and villages.

1.2.2. Tax base

Basically, personal inhabitant’s taxes (prefectural and municipal inhabitant’s taxes) consist of two parts; one is income based tax and the other is a fixed per capita amount. The taxable income of personal inhabitant’s taxes is computed on the basis of the previous year’s income. The main difference from state tax (income tax) is the amount of income reliefs (tax deductions). For example, the amount of basic tax allowance, tax allowance for spouse, tax allowance for dependants is JPY 330 000, and the amount of specified allowance for dependants is JPY 450 000, etc.

1.2.3. Tax rate

• The standard fixed (annual) per-capita amount of Prefectural inhabitant’s tax is JPY 1 500;

• The standard fixed (annual) per-capita amount of Municipal inhabitant’s tax is JPY 3 500;

• The standard rate of the income based tax is 10% (Prefectural inhabitant’s tax: 4%, Municipal inhabitant’s tax: 6%).*

 

Taxable income for local income tax purposes	The tax credit
JPY 2 000 000 or less	5% of the lesser of: total amount of differences in personal reliefs between those for income tax purposes and for personal inhabitant’s taxes purposes; or taxable income amount for personal inhabitant’s taxes purposes
More than JPY 2 000 000	((total amount of differences in personal reliefs between those for income tax purposes and for personal inhabitant’s taxes purposes) – (taxable income amount for personal inhabitant’s taxes purposes – JPY 2 000 000)) * 5%. Note: The minimum credit is JPY 2 500

Notes : Local authorities do not levy the per-capita rate and the income based tax on a taxpayer whose previous year’s income does not exceed a certain amount. For example, in special wards of Tokyo, this threshold is calculated as follows:

per-capita rate: (1 + number of spouse and dependent(s) qualified for the allowance for spouse/dependents) * 350 000 (+ 210 000 in case the taxpayer has a qualified spouse or dependent(s)))

income based tax: (1 + number of spouse and dependent(s) qualified for the allowance for spouse/dependents) * 350 000 (+ 320 000 in case the taxpayer has a qualified spouse or dependent(s)))

1.2.4. Tax rate selected for this study

State tax (income tax) rates as aforementioned. The local tax (personal inhabitant’s taxes) rates chosen for the purpose of this Report represent the standard rate.

2. Compulsory social security contribution to schemes operated within the government sector

2.1. Employees’ contributions

2.1.1. Pension

9.091% (9.15% as from September 2017) of total remuneration (standard remuneration and bonuses). The insurable ceiling of the monthly amount of pensionable remuneration is JPY 620 000 and the insurable ceiling of the standard amount of bonus is JPY 1 500 000.

2.1.2. Sickness

As from April 2012 about 5.00%, (about 4.75% before March 2012), of total remuneration, (standard remuneration and bonuses). The insurable ceiling of the monthly amount of standard remuneration is JPY 1 390 000 and the insurable ceiling of the yearly amount of standard bonus is JPY 5 730 000.

2.1.3. Unemployment

0.3% of total remuneration for Commerce and industry in general except for Business of agriculture, forestry and fisheries, and the rice wine brewing business, and Construction business. It is 0.4% for those exceptions.

2.1.4. Work injury and family allowance

None.

2.2. Employers’ contributions

2.2.1. Pensions

9.091% (9.15% as from September 2017) of total remuneration (standard remuneration and bonuses). The insurable ceiling of the monthly amount of pensionable remuneration is JPY 620 000 and the insurable ceiling of the standard amount of bonus is JPY 1 500 000.

2.2.2. Sickness

As from April 2012, about 5.00% (about 4.75% before March 2012) of total remuneration. The insurable ceiling of the monthly amount of standard remuneration is JPY 1 390 000 and the insurable ceiling of the yearly amount of standard bonus is JPY 5 730 000.

2.2.3. Unemployment

0.6% of total remuneration for Commerce and industry in general except for Business of agriculture, forestry and fisheries, and the rice wine brewing business, and Construction business. It is 0.7% for Business of agriculture, forestry and fisheries, and the rice wine brewing business, and 0.8% for Construction business.

2.2.4. Work injury

0.25% to 8.8% of total remuneration, the contribution rate depending on each industry’s accident rate over the last three years and other factors. There are twenty-nine rates for fifty-four industrial categories at present.

2.2.5. Family allowance

0.23% of total remuneration.

3. Cash benefits

3.1. Benefits related to marital status

Not available.

3.2. Benefits for dependent children

From April 2012 (Income caps are applied beginning from June 2012 payments):

For persons earning incomes below the income cap

JPY 15 000 (per month) is paid to parents/guardians for each child who is under 3 years old or for the third or subsequent child from 3 years old until he/she graduates from elementary school.

JPY 10 000 (per month) is paid to parents/guardians for each child who is for the first or second child from 3 years old until he/she graduates from elementary school or who is a junior high school student.

For persons earning incomes no less than the income cap

JPY 50 00 (per month) is paid to parents/guardians for each child until he/she graduates from junior high school as the Special Interim Allowances.

The income cap is set at JPY 6 220 000 (the principal’s gross earnings net of certain deductions, plus JPY 380 000 per dependent).

4. Main changes in the tax/benefit systems since 1998

As part of the Fiscal Year 1999 tax reform, the highest marginal rate of the personal income tax imposed by the central government was reduced from 50% to 37%. The top rate of the local inhabitant’s tax was reduced from 15% to 13%. A proportional tax reduction was granted with respect to the national income tax and the local inhabitant’s tax. The amount is equal to the lesser of 20% (local inhabitant’s tax: 15%) of the amount of tax before reduction or JPY 250 000 (local inhabitant’s tax: JPY 40 000).

As part of the FY 2005 tax reform, the rate of proportional tax reduction was reduced from 20% to 10% (local inhabitant’s tax: from 15% to 7.5%) and the ceiling was reduced from JPY 250 000 to JPY 125 000 (local inhabitant’s tax from JPY 40 000 to JPY 20 000) as from 2006 (local inhabitant’s tax: FY 2006). In the FY 2006 tax reform, the proportional tax reduction was abolished as from 2007 (local inhabitant’s tax: FY 2007).

As part of the FY 2006 tax reform, the progressive rate structure of national income tax was reformed into a 6 brackets structure with tax rates ranging from 5% to 40%, and the rate of local inhabitant’s tax became proportional at a single rate of 10%.

As part of the FY 2012 tax reform, the upper limit on employment income deduction (JPY 2 450 000) was set for those who earn employment income of more than JPY 15 000 000 as from 2013 (personal inhabitant’s tax: FY 2014).

As part of the FY 2013 tax reform, the tax rate of 45% was set for the income beyond JPY 40 000 000 from 2015 creating a7 brackets structure

As part of the FY 2014 tax reform, the upper limit on employment income deduction was determined to be gradually reduced. In 2016 (as for personal inhabitant’s taxes, in 2017), the limit became JPY 2 300 000 for salary income more than JPY 12 000 000. And in 2017 (as for personal inhabitant’s taxes, in 2017), the limit will become JPY 2 200 000 for salary income more than JPY 10 000 000.

As part of the FY 2017 tax reform, as regards allowance for spouse and special allowance for spouse, the maximum spousal income qualifying for the tax allowance (maximum JPY 380 000) will be raised from JPY 380 000 to JPY 850 000. At the same time, an upper income limit will be introduced as a requirement for taxpayers to qualify for allowance for spouse and special allowance for spouse. The reform will go into effect in FY 2018.

Eligible age for cash benefits for dependent children was raised from three to six as from 1 June 2000, from six to nine as from 1 April 2004 and from nine to twelve as from 1 April 2006. Benefit amount has been doubled to JPY 10 000 for the first and second child under the age of three as from 1 April, 2007.

As from 2010, JPY 13 000 per month is paid to parents/guardians regardless of their income for each child until he/she graduates from junior high school.

As from April 2012 (Income caps are applied beginning from June 2012 payments):

For persons earning incomes below the income cap

JPY 15 000 (per month) is paid to parents/guardians for each child who is under 3 years old or for the third or subsequent child from 3 years old until he/she graduates from elementary school.

JPY 10 000 (per month) is paid to parents/guardians for each child who is for the first or second child from 3 years old until he/she graduates from elementary school or who is a junior high school student.

For persons earning incomes over the income cap

JPY 5 000 (per month) is paid to parents/guardians for each child until he/she graduates from junior high school as the Special Interim Allowances.

5. Memorandum item

5.1. Average gross annual wage earnings calculation

The source of calculation is the Basic Survey on Wage Structure, published by the Ministry of Health, Labour and Welfare. This survey covers establishments with ten or more regular employees over the whole country, and contains statistical figures for monthly contractual cash earnings in June and annual special cash earnings (such as bonuses) received by various categories of workers. Male and female workers of the manufacturing, mining and quarrying, construction, wholesale and retail trade, accommodation and food service activities, financial and insurance activities, real estate activities sector are the point of departure. Their gross annual earnings have been calculated by multiplying monthly contractual cash earnings by 12 and adding any annual special cash earnings. In the Basic Survey, sickness and unemployment compensations are excluded from cash earnings, but average overtime and bonuses are included.

As far as the Basic Survey is concerned, it covers the whole country, and no special assumption is made regarding the place of residence of the average worker.

5.2. Employer contributions to private pension and health schemes

DB: JPY 3257 billion (2014)

Employees’ Pension Funds (EPFs): JPY 606 billion (2015)

DC: JPY 780 billion (2015)

Data of DB and EPFs are the total amount of employers’ contribution and employees’ one and there is no data of those which indicates only employers’ contribution. Under DC schemes, as from January 2012, matching contribution which enables employee to pay additional contribution to employer’s one became available. The amount of DC does not include the amount of matching contribution. It is regulated by law that employers’ contribution must be higher than employees’ one.

Japan

2017 parameter values

Average earnings/yr	Ave_earn	5 201 391	Secretariat estimate
Allowances for central tax	basic_al	380 000
	spouse_al	380 000
	Spouse_al_sp	0	0
		380 001	380 000
		400 000	360 000
		450 000	310 000
		500 000	260 000
		550 000	210 000
		600 000	160 000
		650 000	110 000
		700 000	60 000
		750 000	30 000
		760 000	0
	taxpayer_lim	10000000
spouse_al_ceil		380 000
	child_al	0
Employment income deduction	emp_inc_min	650 000
	emp_inc_sch	0.4	1 800 000
		0.3	3 600 000
		0.2	6 600 000
		0.1
	emp_inc_max	2 200 000
Central gov’t tax schedule	tax_sch	0.05	1 950 000
		0.10	3 300 000
		0.20	6 950 000
		0.23	9 000 000
		0.33	18 000 000
		0.40	40 000 000
		0.45
	surtax	1.021
Allowances for state/local tax	s_basic_al	330 000
	s_spouse_al	330 000
	s_spouse_al_sp	0	0
		380 001	330 000
		450 000	310 000
		500 000	260 000
		550 000	210 000
		600 000	160 000
		650 000	110 000
		700 000	60 000
		750 000	30 000
		760 000	0
	S_spouse_al_ceil	380 000
	s_child_al	0
Prefectural tax	pref_per_cap	1 500
Municipal tax	mun_per_cap	3 500
	local_sch	0.1
Social security contributions	SSC_pens	0.911067
	pens_ceil	7 440 000
	SSC_sick	0.05
	sick_ceil	16 680 000
	SSC_unemp	0.003
Employer contribution proportion	SSC_empr_unemp	0.006
	SSC_empr_oth	0.0048
Child transfer	Child_transfer	120 000
	Child_transfer2	60 000
	Child_transfer_lim	6 220 000
	Child_transfer_lim_incr	380 000

2017 tax equations

The equations for the Japanese system are mostly on an individual basis. But the tax allowances for the spouse and for children are relevant only to the calculation for the principal earner. This is shown by the Range indicator in the table below.

The functions which are used in the equations (Taper, MIN, Tax etc) are described in the technical note about tax equations. Variable names are defined in the table of parameters above, within the equations table, or are the standard variables “married” and “children”. A reference to a variable with the affix “_total” indicates the sum of the relevant variable values for the principal and spouse. And the affixes “_princ” and “_spouse” indicate the value for the principal and spouse, respectively. Equations for a single person are as shown for the principal, with “_spouse” values taken as 0.

 

	Line in country table and intermediate steps	Variable name	Range	Equation
1.	Earnings	earn
2.	Allowances:
		tax_al	P	basic_al +Married*(earn_princ (earn_princ>0)*MIN(emp_inc_max,MAX(emp_ inc_min,Tax(earn_princ, emp_inc_sch)))<=’spouse_al_ceil)*spouse_al’ +IF(earn_ princ <= taxpayer_lim, Married*VLOOKUP(Positive(earn_princ (earn_princ>0) *MAX(emp_inc_min,Tax(earn_princ, emp_inc_sch))),spouse_al_sp,2,TRUE),0) + Children*child_al + MAX(emp_inc_min,Tax(earn_princ,emp_inc_sch)) + SSC_princ
			S	MIN(earn_spouse, basic_al + MAX(emp_inc_min, Tax(earn, emp_inc_sch)) + SSC_spouse)
3.	Credits in taxable income	taxbl_cr	B	0
4.	CG taxable income	tax_inc	B	Positive(earn-tax_al)
5.	CG tax before credits	CG_tax_excl	B	Positive(Tax(tax_inc, tax_sch))
6.	Tax credits :	tax_cr	B	0
7.	CG tax	CG_tax	B	CG_tax_excl*surtax
8.	State and local taxes
	Local taxable income	local_tax_inc	P	Positive(earn_princ(s_basic_al+Married*((earn_spouse-(earn_spouse>0)*MAX (emp_inc_min,Tax(earn_spouse,emp_inc_sch))<=s_spouse_al_ceil)*s_spouse_al+VLOOKUP(Positive(earn_spouse-(earn_spouse>0)*MAX(emp_inc_min,Tax (earn_spouse,emp_inc_sch))),s_spouse_al_sp,2,TRUE))+Children*s_child_al+MAX(emp_inc_min,Tax(earn_princ,emp_inc_sch))+SSC_princ))
			S	Positive(earn_spouse-(s_basic_al+(earn_spouse>0)*MAX(emp_inc_min,Tax (earn_spouse,emp_inc_sch))+SSC_spouse))
	Local tax	local_tax	P	(earn_princ-MAX(emp_inc_min,Tax(earn_princ,emp_inc_sch))>350000+ (Married*(earn_princ (earn_princ>0)*MAX(emp_inc_min,Tax(earn_princ, emp_ inc_sch))<=’s_spouse_al_ceil)+Children>0)*((Married*(earn_princ’ (earn_princ >0)*MAX(emp_inc_min,Tax(earn_princ, emp_inc_sch))<=’s_spouse_al_ceil)+ Children)*350000+210000))*(pref_per_cap+mun_per_cap)+(earn_princ-MAX (emp_inc_min,Tax(earn_princ,emp_inc_sch))>350000+(Married*(earn_princ’ (earn_princ>0)*MAX(emp_inc_min,Tax(earn_princ, emp_inc_sch))<=’s_spouse_ al_ceil)+Children>0)*((Married*(earn_princ’ (earn_princ>0)*MAX(emp_inc_min, Tax(earn_princ, emp_inc_sch))<=s_spouse_al_ceil)+Children)*350000+ 320000))*Positive(Tax(Positive(earn_spouse-tax_al_spouse),local_sch)-IF (Positive(earn_spouse-tax_al_spouse)>2000000,MAXA(2500,((Positive(earn_ spouse-tax_al_spouse)-MAX(emp_inc_min,Tax(earn_princ,emp_inc_sch)))-(Positive(earn_spouse-tax_al_spouse)-2000000))*5%),MINA((Positive(earn_ spouse-tax_al_spouse)-MAX(emp_inc_min,Tax(earn_princ,emp_inc_sch))), Positive(earn_spouse-tax_al_spouse))*5%))
			S	(earn_spouse (earn_spouse>0)*MAX(emp_inc_min,Tax(earn_spouse, emp_inc_ sch))>350000)*(pref_per_cap+mun_per_cap+Positive(Tax(local_tax_inc_spouse,local_sch)-IF(local_tax_inc_spouse>2000000,MAXA(2500,((local_tax_inc_spouse-tax_inc_spouse)-(local_tax_inc_spouse-2000000))*5%),MINA((local_tax_inc_ spouse-tax_inc_spouse),local_tax_inc_spouse)*5%)))
9.	Employees’ soc security	SSC	B	SSC_pens*MIN(earn, pens_ceil)+SSC_sick*MIN(earn, sick_ceil)+SSC_unemp*earn
11.	Cash transfers	cash_trans	B	IF(Children>0,IF(Positive(princ_inc princ_empl_inc)<Child_transfer_lim+(Child_ transfer_lim_incr*Children), Child_transfer,Child_transfer2)*Children,0)
13.	Employer’s social security	SSC_empr	B	SSC_pens*MIN(earn, pens_ceil)+SSC_sick*MIN(earn, sick_ceil)+(SSC_empr_unemp+SSC_empr_oth)*earn

Key to range of equation B calculated separately for both principal earner and spouse P calculated for principal only (value taken as 0 for spouse calculation).