Japan tax reforms to update year-end adjustment rules for 2026

Japan is implementing several changes to the year-end tax adjustment (nenmatsu chosei) system for the 2026 tax year. These revisions aim to adjust deductions and may impact how much tax is refunded to employees.

Key changes include an increase in the basic deduction, which will rise from 880,000 yen to 1.04 million yen for certain income brackets. Additionally, the minimum guaranteed amount for the salary income deduction is set to increase from 650,000 yen to 740,000 yen.

The reforms also introduce a special deduction for specific relatives, targeting dependents aged 19 to 23 with certain income levels, such as university students. Furthermore, income requirements for dependents and special spouse deductions are being revised, potentially expanding the number of people eligible for these tax benefits.