Basic deduction for income tax rises from JPY 580,000 to JPY 620,000: from the 2026 (Reiwa 8) year-end adjustmentThe "basic allowance" that is free from tax has become a little bigger
Under the FY2026 (Reiwa 8) tax reform, the basic deduction under the Income Tax Act has been raised from JPY 580,000 to JPY 620,000, and the deduction amounts combined with the add-ons based on total income have also been revised. In principle it takes effect on December 1, 2026 (Reiwa 8) and applies to income tax for 2026 (Reiwa 8) and later years. There is no change to withholding procedures up to November 2026 (Reiwa 8).
Key points
- The basic deduction under Article 86 of the Income Tax Act becomes JPY 620,000 (JPY 580,000 before the reform). Where total income is JPY 6.55 million or less, an add-on under the Act on Special Measures Concerning Taxation is added on top
- Where total income is JPY 1.32 million or less, the deduction is JPY 1.04 million for 2026 and 2027 (Reiwa 8 and 9) (JPY 950,000 before the reform), and JPY 990,000 for 2028 (Reiwa 10) and later
- Total income over JPY 4.89 million up to JPY 6.55 million: JPY 670,000 (JPY 630,000 before the reform). Over JPY 6.55 million up to JPY 23.5 million: JPY 620,000 (JPY 580,000 before the reform). There is no change to the deduction for income over JPY 23.5 million
- In the December 2026 (Reiwa 8) year-end adjustment, the annual tax is calculated using the raised basic deduction and settled against the tax withheld using the pre-reform withholding tax table. The withholding tax tables for 2027 (Reiwa 9) and later have also been revised
What to do in practice
- Check the form and deduction amounts of the 2026 (Reiwa 8) basic deduction declaration (combined with the spouse deduction declaration, the specified relative special deduction declaration and the income adjustment deduction declaration)
- Check that your payroll software and year-end adjustment software are versions that support the 2026 (Reiwa 8) changes
Tax is charged on what is left after you first subtract a "basic allowance" from a year's earnings. This basic allowance is called the "basic deduction", and it gets a little bigger from 2026 (Reiwa 8). The bigger the allowance, the smaller the part that is taxed.
Points
- Even for people with higher earnings, the basic allowance goes up from JPY 580,000 to JPY 620,000
- For people with small earnings, the basic allowance goes from JPY 950,000 to JPY 1.04 million
- The year-end calculation (year-end adjustment) will use the new allowance from December 2026 (Reiwa 8)
What the words mean
- Basic deduction
- A basic amount that everyone gets to subtract from their earnings first when working out tax
- Total income
- All of a year's earnings added together
- National Tax Agency (NTA): NTA: How to Do the Year-End Adjustment for 2026 (Reiwa 8) (Part I: What Has Changed from Last Year)
- National Tax Agency (NTA): NTA: On the Increase in the Basic Deduction for Income Tax and Other Changes in the FY2026 (Reiwa 8) Tax Reform
This article summarizes and explains materials published by government agencies and is not advice on any individual case. Rules can change, so for actual procedures and decisions always check the latest original materials and consult professionals such as tax accountants or labor and social security attorneys. English, Simplified Chinese and Traditional Chinese versions are translations prepared from the Japanese articles for convenience. If anything differs, the Japanese text and the original source take precedence.