Minimum Tax Strengthened: Special Deduction Cut to JPY 165 Million, Rate Raised to 30% From 2027 (Reiwa 9)The "minimum tax" for people with very large incomes gets heavier from 2027
The FY2026 (Reiwa 8) tax reform revised the measure to ensure an appropriate tax burden on extremely high incomes (the so-called minimum tax). The special deduction subtracted from the base income amount used to calculate the additional tax is lowered from JPY 330 million to JPY 165 million, and the rate is raised from 22.5% to 30%. It applies to income tax for 2027 (Reiwa 9) and later (the amending act was passed on March 31, 2026 (Reiwa 8)).
Key points
- If (base income amount − special deduction) × rate exceeds the regular income tax amount, the difference is filed and paid as additional tax
- Special deduction: JPY 165 million (JPY 330 million before the reform); rate: 30% (22.5% before the reform)
- The base income amount is the total of salary and business income, capital gains on shares, capital gains on land and buildings, and all other types of income
- According to MOF materials, if all income is separately taxed (15%), an additional burden arises from annual income of about JPY 340 million
- Expected revenue increase: JPY 400 billion in a normal year, including the existing portion (JPY 113 billion)
What to do in practice
- For sales of shares or real estate planned for 2027 (Reiwa 9) or later, recalculate the additional tax under the revised rules
- When considering the timing or splitting of sales, confirm the scope of the revised base income amount with a tax accountant
Tax on profits from selling shares is a lower percentage than tax on ordinary salaries, so very rich people can end up paying a smaller share of their income in tax. There is a rule that says "you must pay at least this much," and from 2027 that minimum line will be raised.
- Usual income tax (15%)
- JPY 150 million
- Minimum line (JPY 1 billion − JPY 165 million) × 30%
- JPY 250.5 million
- Extra tax to pay (difference)
- JPY 100.5 million
Points
- It only affects a very small number of people whose income is several hundred million yen a year
- The amount subtracted from income is halved from JPY 330 million to JPY 165 million, and the rate rises from 22.5% to 30%
- Only when the calculated amount is more than the usual tax do they pay the difference as extra tax
What the words mean
- Minimum tax
- A tax line saying people with very large incomes must pay at least a certain amount
- Separate taxation
- A way of taxing profits from selling shares or land at a fixed rate, separately from salary
- Ministry of Finance (MOF): MOF: Outline of the FY2026 (Reiwa 8) Tax Reform (Cabinet decision of December 26, 2025 (Reiwa 7))
- Ministry of Finance (MOF): MOF: Finance magazine feature, FY2026 (Reiwa 8) Tax Reform (National Taxes)
This article previews changes that have already been decided and will take effect in the future. Effective dates and details can change, so please check the official source shortly before the date.
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.