Tax-free limit for car commuting allowances: increase for 65 km or more one way and parking fee add-onThe tax-free limit on commuting money for people who drive to work has gone up
For the tax-free limit of commuting allowances paid to people who commute by car, bicycle or other means, the categories of 65 km or more one way have been raised, and people who bear certain parking fees can add the amount equal to the parking fee (up to JPY 5,000). It applies to commuting allowances due to be paid on or after April 1, 2026 (Reiwa 8).
Key points
- JPY 45,700 a month for 65 km to under 75 km one way, JPY 52,700 for 75 km to under 85 km, JPY 59,600 for 85 km to under 95 km, and JPY 66,400 for 95 km or more (before the revision, a flat JPY 38,700 for 55 km or more one way)
- For a person who uses a parking space meeting certain requirements and habitually bears its fee, the tax-free limit is the limit for the distance category plus the monthly amount equal to the parking fee (up to JPY 5,000) (not applicable to those commuting under 2 km one way)
- Under 2 km one way is fully taxable, and 2 km to under 10 km is JPY 4,200, etc. The categories under 55 km are unchanged
- Applies to commuting allowances due to be paid on or after April 1, 2026. Additional payments as a difference for allowances due before that date are excluded
What to do in practice
- Review the tax-free limit for long-distance commuters under the new categories
- If employees bear parking fees themselves, check that the parking meets the requirements (around the workplace or the nearest station, etc.)
Commuting money paid by a company is not taxed up to a set amount. For people who commute by car or bicycle, the limit for very long distances has been raised, and the parking fee, up to JPY 5,000, can now be added on top.
Points
- For people who commute 65 km or more one way, the tax-free limit goes up
- People who pay for parking themselves can add that amount (up to JPY 5,000) to the limit
- The limit for shorter distances stays the same
What the words mean
- Tax-free
- Not charging tax
- Commuting allowance
- Money a company pays as travel costs for getting to work
- National Tax Agency (NTA): NTA: April 2026 (Reiwa 8) Outline of Withholding Income Tax Revisions (tax-free limit for commuting allowances)
- National Tax Agency (NTA): NTA: Year-End Adjustment Guide Page (2026)
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.