Medical Expense Deduction Simulation: How to Calculate Your Tax Refund and Eligible Expenses
If you spent more than ¥100,000 on medical expenses in a year, you may be entitled to a tax refund through Japan's medical expense deduction. Learn how to calculate your refund, what expenses qualify, and how to maximize your return.
What Is Japan's Medical Expense Deduction?
If you spent a substantial amount on medical expenses in Japan and didn't file a tax return, you may have missed out on a significant refund. The medical expense deduction reduces your taxable income based on qualified medical spending — but it must be claimed through a tax return (確定申告).
The basic formula is:
Medical Expense Deduction = Total Medical Expenses Paid − Insurance Reimbursements − ¥100,000 (or 5% of gross income, whichever is less)
The maximum deduction is ¥2,000,000.
Simulating Your Refund
Your actual refund is calculated as: Deduction Amount × Your Income Tax Rate
Japan's income tax rates (2026):
- Up to ¥1.95M: 5%
- ¥1.95M–¥3.3M: 10%
- ¥3.3M–¥6.95M: 20%
- ¥6.95M–¥9M: 23%
- ¥9M–¥18M: 33%
Example: Annual income ¥5M, medical expenses ¥500,000 (no insurance reimbursement)
- Assuming income tax rate of 20%
- Deduction: ¥500,000 − ¥100,000 = ¥400,000
- Income tax refund: ¥400,000 × 20% = ¥80,000
- Resident tax reduction: ¥400,000 × 10% = ¥40,000 (reduced in the following year)
- Total tax savings: approximately ¥120,000
What Medical Expenses Are Eligible?
Eligible Expenses
Medical treatment:
- Doctor and dentist consultation/treatment fees
- Prescription medications
- Hospital stays, surgery fees
- Infertility treatments and IVF
- Dental prosthetics (if for functional improvement, not cosmetic)
- Childbirth costs
- Long-term care insurance copayments
- LASIK surgery for vision correction
Transportation:
- Public transportation (bus, train) to medical facilities
- Taxis if public transit is unavailable (e.g., emergencies)
Non-Eligible Expenses
- Health checkups/annual physicals (unless disease is found and treatment follows)
- Cosmetic surgery and procedures
- Over-the-counter vitamins, supplements
- Gym memberships, even if for health reasons
- Eyeglasses/contact lenses (unless prescribed for treatment)
Combining Family Medical Expenses
One of the most powerful features: you can combine all medical expenses for family members living together (sharing the same household budget). Adding up costs for a spouse, children, and dependent parents can easily push totals past the ¥100,000 threshold.
Self-Medication Tax System (Alternative Option)
Since 2017, there is an alternative: the Self-Medication Tax System for purchases of designated OTC switch drugs.
- Deductible: Amount over ¥12,000 per year (max ¥88,000)
- Requirement: Must have undergone a health checkup or vaccination during the year
- You must choose either this system or the regular medical expense deduction — not both
Filing Your Tax Return
Medical expense deductions require a separate tax return even if you have year-end adjustment through your employer.
Process:
- Collect receipts for all medical expenses from January 1 to December 31
- Enter into NTA's medical expense summary form
- File via e-Tax (using My Number Card) or paper return
- Deadline: February 16 – March 15 of the following year
- Late claims: Can be filed retroactively up to 5 years after the original deadline
Note: Reimbursements from health insurance (including government high-cost medical care benefits) must be subtracted from your total before calculating the deduction.
FAQ
Q: What if my expenses don't reach ¥100,000? A: Individuals with gross income below ¥2,000,000 use 5% of their gross income as the threshold instead of ¥100,000. This makes the deduction accessible for lower-income filers.
Q: I received a childbirth lump-sum benefit (¥420,000). How does that affect my claim? A: Subtract the ¥420,000 benefit from your total delivery costs. If delivery cost ¥500,000 and you received ¥420,000, only ¥80,000 is eligible for the deduction.
Q: Can I file for past years' medical expenses? A: Yes — you can file amended returns going back 5 years (called 更正の請求). Check your old receipts — you may have unclaimed deductions.
Conclusion
The medical expense deduction doesn't apply automatically — you must file for it. By combining family expenses and carefully tracking all qualifying costs, the refund can be surprisingly large. Start by simulating your potential refund.
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