Japanese Car Tax (Shubetsu-wari) Basics: Rates by Engine Size, Kei Cars, Monthly Proration

If you own a car in Japan, a tax notice for the "car tax (shubetsu-wari)" arrives every spring. The amount runs to tens of thousands of yen and is no small expense for a household. Yet surprisingly few people can explain exactly why the amount is what it is, or whose ownership on which date triggers the bill. This article walks through the basics of the car tax, from how the amount is set to how it is paid.

What the Car Tax (Shubetsu-wari) Is

The car tax (shubetsu-wari) is a local tax (a prefectural tax) levied every year on the ownership of a vehicle. It used to be called simply the "automobile tax," but a 2019 reform split it into the shubetsu-wari, which is charged on ownership, and the environmental performance levy, which is charged at purchase. What people generally call the annual "car tax" is this shubetsu-wari.

The amount is set in tiers by the vehicle's use (private or commercial) and its total engine displacement. In short, the larger the engine, the heavier the tax. Note too that standard cars are paid to the prefecture, while kei (light) cars are paid to the municipality.

When you want a quick idea of your own car's tax, the Car Tax Calculator lets you enter the displacement and see an estimate right away.

Rough Rates by Engine Displacement

For a private passenger car (standard vehicle), the car tax is set per displacement bracket. Cars newly registered on or after October 1, 2019 enjoy reduced rates. The figures below are rough estimates under the new rates (private passenger cars).

As you can see, the amount rises each time you cross a 0.5L bracket. A compact car is around 30,000 yen a year, while a mid-class sedan or minivan is roughly in the 40,000-50,000 yen range. Because some cars are still on the old rates depending on when they were registered, the surest way to know the exact amount is to check your tax notice.

Even with the same displacement, the final amount changes with the registration date, the use, and the reductions or surcharges described below.

The bracket boundaries fall on round numbers like 1.5L and 2.0L. When choosing a used car or switching vehicles, keeping these brackets in mind makes it easier to hold down your annual running costs. Entering several displacements in the Car Tax Calculator for comparison makes the differences between brackets clear.

How It Differs From the Kei (Light) Car Tax

Kei (light) cars have a tax with the same structure, called the kei car tax (shubetsu-wari), but it differs from the standard car in several ways.

The biggest difference is how cheap it is. A private kei passenger car is 10,800 yen a year regardless of displacement, which is a bargain even compared with the cheapest standard-car bracket. This is one major reason kei cars are said to be cheap to keep.

Another key difference is whether monthly proration applies. As described below, standard cars have monthly proration when registered or deregistered partway through the year, but the kei car tax generally has none: if you own the car on April 1, the full year's amount applies.

The April 1 Owner Is Charged, and Monthly Proration

The point most often misunderstood about the car tax is the timing of the charge. The reference date is April 1 each year. Whoever is the owner on the registration certificate on that date is charged for the full year (April through the following March).

In other words, even if you let go of the car on April 2, that year's amount is billed to the owner as of April 1. Conversely, if you newly register a car on or after April 2, you are not charged for April; instead it is calculated by monthly proration from the month after registration through the end of the year (March).

• New registration partway through the year: prorated by the number of months from the month after registration through March. For example, a July registration means 8 months, from August through March.
• Scrapping (deregistration) partway through the year: for standard cars, the remaining months may be refunded if you complete the procedure.
• Change of owner (used-car sale): who bears the cost, seller or buyer, is usually a matter of agreement between the parties, and it is common to settle it within the price.

Buying a used car partway through the year can mean only a prorated amount for that year. To picture the prorated figure, the Car Tax Calculator makes it easy to estimate while factoring in the registration month.

The Green-Car Reduction and the 13-Year Surcharge

The car tax has a mechanism that raises or lowers the amount according to environmental performance: the green-car reduction and the surcharge on aging vehicles.

Green-car reduction

Electric vehicles and cars that meet fuel-economy standards with high environmental performance receive a reduced car tax in the fiscal year after new registration. The eligible vehicles and the reduction rate change with annual reforms, but electric vehicles and the like generally see a large cut. The aim is to favor environmentally friendly cars and encourage replacement.

Surcharge over 13 years

Conversely, cars that have passed a certain number of years since new registration are charged extra. Gasoline and LPG vehicles incur roughly a 15% surcharge once they exceed 13 years from registration (over 11 years for diesel). This rests on the idea that older cars place a greater burden on the environment.

If you keep the same car for a long time, the amount can suddenly jump in a certain year. Often this is because the over-13-year surcharge has kicked in.

Note that electric and hybrid vehicles are exempt from this aging surcharge. When you want to compare the surcharge on an old car or how the tax changes after switching vehicles, the Car Tax Calculator makes it easy to test different conditions.

How to Pay and Avoiding Missed Payments

The car tax notice is typically sent by the prefecture in early May, with the due date generally the end of May (this can vary by locality). Payment methods have grown more varied year by year.

• Counter or convenience-store payment: the most basic method, paying at a bank or convenience store with the notice in hand.
• Direct debit: register in advance for automatic withdrawal, which prevents missed payments.
• Credit card or smartphone payment: a growing number of localities accept payment on dedicated sites or apps (various pay services). You may earn points, but a processing fee can apply.

If you miss the payment, a late charge accrues, and while it remains unpaid you cannot pass the vehicle inspection (shaken), because proof of tax payment is required at inspection (this can sometimes be omitted thanks to digitization). Aim to pay within the deadline.

The car tax is determined by several factors: displacement, registration date, environmental performance, and the years elapsed. Start by entering your car's conditions in the Car Tax Calculator to grasp the rough annual or prorated amount, which makes it easier to plan for payment and for switching vehicles.

Please note that this article is intended to provide general information, and tax amounts and rules vary by fiscal year and by locality. Make your decision after checking the actual amounts and procedures against your tax notice and the latest official information from your prefecture or municipality.