The "income wall" that people worry about when working part-time or as an arbeit worker. In fact, the tax wall and the social-insurance wall (106万円 and 130万円) are completely different things. In particular, once you cross the social-insurance wall, you have to start paying your own insurance premiums, so your take-home pay can temporarily fall — the "working at a loss" phenomenon that easily occurs. At the same time, a major revision will take place in 2026. This article organizes how the 106万円 and 130万円 walls each work, the latest reforms, and how to think about working without losing out.
From October 1, 2026, people who work 20 hours or more a week at companies with 51 or more employees will join social insurance regardless of their annual income (the 106万円 wall is abolished and becomes a "20-hours-a-week wall"). The 130万円 wall will remain for the time being, but from April 2026 the assessment has already been eased to a contract basis.
The "tax wall" and the "social-insurance wall" are different things
There are two systems of "income wall." Confusing them leads to wrong decisions.
| System | Main walls | What happens when you cross it |
|---|---|---|
| Tax wall | Income tax on you starts from 160万円 (for the 2025 tax year) → 178万円 (for the 2026 tax year). The threshold for the dependent and spousal deductions is 123万円 → 136万円 (for the 2026 tax year) | Income tax on you / reduction of the spousal deduction and special spousal deduction (gradual) |
| Social-insurance wall | 106万円 and 130万円 | You join social insurance and premium payments arise |
The tax wall is explained in From the 103万円 wall to the 123万円 wall. Here we look at the social-insurance wall.
The 106万円 wall (joining social insurance at your part-time workplace)
This is the threshold for joining social insurance (employees' pension and health insurance) at your workplace. If you meet all of the following conditions, you join and premiums are deducted from your salary.
① Prescribed working hours of 20 hours or more a week
② Monthly wage of 8.8万円 or more (≒ 106万円 a year)
③ Expected to be employed for more than 2 months
④ Not a student
⑤ A company with 51 or more employees (from October 2024)
On October 1, 2026, the 106万円 wall becomes the "20-hours-a-week wall"
On October 1, 2026, the monthly-wage requirement of 8.8万円 (106万円 a year) will be abolished (the pension system reform act enacted in 2025. Rising minimum wages satisfied the implementation conditions, and the enforcement date has been fixed). After abolition, if you meet the conditions of 20 hours or more a week, expected employment of more than 2 months, not a student, and a company with 51 or more employees, you join social insurance regardless of your annual income. In other words, the real dividing line becomes not "income" but your weekly working hours[Ministry of Health, Labour and Welfare (in Japanese)].
Furthermore, the company-size requirement (51 or more employees) will also be phased out from October 2027, and all companies are scheduled to be covered by 2035. The trend is for more and more short-time workers to join social insurance.
The 130万円 wall (leaving your dependent status)
Even for people who are not covered by the 106万円 rule, once your annual income reaches 130万円 or more, you leave the social-insurance dependent status of your spouse or another person and join the National Pension and National Health Insurance (or your workplace's social insurance) yourself. This applies to everyone regardless of company size.
From April 2026, the income assessment for 130万円 changed to a treatment certified based on the contractual base income stated in the working conditions notice and the like. If your contractual annual income is under 130万円, then even if you exceed it due to overtime during a temporary busy period, you can in principle remain a dependent.
Even if you temporarily exceed 130万円 due to overtime and the like, if your workplace's employer certifies that it is "a temporary fluctuation in income," there is a mechanism that lets you remain a dependent for up to two consecutive times (a maximum of 2 years) (the income-wall support-strengthening package)[Ministry of Health, Labour and Welfare (in Japanese)].
The true nature of "working at a loss," and how to think about not losing out
Once you cross the social-insurance wall, premiums (about 15% of salary) are deducted, and right after crossing it your take-home pay can temporarily fall. This is the phenomenon called "working at a loss." However, keeping the following two points in mind changes the judgment.
- Work above a certain level and your take-home pay reverses: If you increase your annual income until it exceeds the premium burden (as a guide, around 150–160万円 a year), your take-home pay exceeds what it was before joining. Holding back halfway can be the most wasteful case.
- Joining social insurance also has merits: Your future pension increases through the employees' pension, and your protection also becomes fuller — injury and sickness allowance for illness or injury, maternity allowance at childbirth, and so on. Health insurance premiums and employees' pension premiums are split with the company.
① Special provision for the employer's additional burden (from October 2026): For people with a standard monthly remuneration (the bracket of monthly salary used as the basis for premium calculation) of 12.6万円 or less, a special provision begins that, by labor-management agreement, lets the employer additionally bear part of the person's own premiums for the first 3 years.
② The income-wall support-strengthening package (in effect): Existing support measures that curb the fall in take-home pay, such as the social-insurance application promotion allowance and the career-up subsidy. In either case, ask your workplace.
FAQ
What is the difference between the 103万円 wall and the 106万円 wall?
103万円 is the old name for the tax wall; due to the reform, income tax on you now starts from an annual income of 160万円 for the 2025 tax year and 178万円 for the 2026 tax year. The 106万円, on the other hand, is the wall for joining social insurance — a completely different system, with a different impact when you cross it.
Will the 106万円 wall disappear?
Yes, it will. On October 1, 2026, the monthly-wage requirement of 8.8万円 (106万円 a year) will be abolished, and from then on whether you work 20 hours or more a week becomes the real dividing line. The company-size requirement of 51 or more employees is also scheduled to be phased out from October 2027.
From October 2026, will I be covered for joining social insurance?
You are covered if you meet all four of the following: ① prescribed working hours of 20 hours or more a week ② expected employment of more than 2 months ③ not a student ④ working at a company with 51 or more employees. The amount of annual income becomes irrelevant. Even at companies that don't meet ④, coverage will expand gradually from October 2027 onward.
If I temporarily exceed 130万円, do I always leave my dependent status?
For a temporary income increase due to overtime and the like, there is a special provision that, with your workplace's employer's certification, lets you remain a dependent for up to two consecutive times (a maximum of 2 years). A permanent income increase is not covered.
Is joining social insurance a loss?
Right after crossing the wall your take-home pay can temporarily fall, but if you work above a certain level it reverses, and you also gain protections such as an increased future pension, injury and sickness allowance, and maternity allowance. Premiums are split with the company.
Summary
Reference links (sources)
This article is based on materials from the following public bodies (neutral, primary sources). Systems are revised, so please check the latest content before deciding.
- Ministry of Health, Labour and Welfare — Response to the "income wall" (in Japanese)
- Ministry of Health, Labour and Welfare — On expanding social-insurance coverage (in Japanese)
- Japan Pension Service — Expansion of employees' pension and health insurance coverage to short-time workers (in Japanese)
* This article is general information, not tax or social-insurance advice. For individual decisions, please confirm with your workplace, a pension office, or a professional.