Japan's 2026 Basic Deduction Change and Your Pay

Last updated: 6 October 2026 · figures for the 2026 tax year (令和8年分)

The 2026 tax reform raised the basic exemption (基礎控除, often called the basic deduction) for 2026 and 2027, so on a ¥5,000,000 salary in Tokyo the year’s income tax falls from ¥120,500 under the 2025 rules to ¥91,600 under the 2026 ones. It applies to everyone with total income up to ¥23,500,000, and an employee gets most of it in one go, in December, because the monthly withholding did not change during 2026. The basic exemption is the amount every taxpayer takes off before income tax is worked out, and it narrows again from 2028.

What changed

The deduction has two parts: a base amount in the Income Tax Act, raised to ¥620,000, and an extra amount in the Special Taxation Measures Act that depends on your total income (合計所得金額) and the year. For a salary alone, total income is the salary after the employment income deduction — about two-thirds of a ¥3 million salary, less of a larger one.

Above ¥23,500,000 of total income the deduction tapers to nothing, as before. The minimum employment income deduction also went up, to ¥740,000 for 2026 and 2027, which matters only for salaries below about ¥2,200,000. For 2028 on, the reform sets out that both figures are to be reviewed every two years against consumer prices.

What it is worth on three salaries

Income tax for a whole year, in Tokyo, single, under 40, on 協会けんぽ, with the salary paid in twelve equal months and no bonus. Social insurance is taken at the rates for fiscal 2026 in every month and every column, so the only thing that changes between the columns is the tax rules. In practice the new health insurance rate applies from the March 2026 premium and the child-care support levy (子ども・子育て支援金) from the April premium (on a payslip that deducts the previous month’s premium, from the April and May pay), so the yearly figures differ from these by a few hundred yen; read the table as the effect of the deduction change, not as your exact bill.

The middle of the range gains most. On ¥5,000,000 total income is ¥3,560,000, which sat in the ¥680,000 band in 2025 and moves to ¥1,040,000 for 2026. On ¥8,000,000 total income is ¥6,100,003, in the band that only rises from ¥630,000 to ¥670,000. In 2028 all three lose the extra amount, and the tax comes out higher than in 2025 — the 2025 reform had its own extra amounts, which 2028 does not carry forward.

Why it arrives in December

The change took effect on 1 December 2026. The monthly withholding tables for 2026 were not revised, so every payslip from January to November withheld tax as if nothing had changed. The year-end adjustment (年末調整) in December then works the year out with the new deduction and gives back the difference.

The same assumptions hold here. On ¥3,000,000 the payslips withhold ¥4,770 a month, ¥57,240 over the year, against the year’s ¥26,600, so December returns ¥30,640. On ¥5,000,000 it is ¥146,640 withheld and ¥55,040 back; on ¥8,000,000, ¥478,560 and ¥44,160. Part of those refunds would be there in any year — why December is different explains the rest — but the new deduction adds to it. From 2027 the tables themselves are revised, so the monthly payslip carries the change and December has less to give back.

Resident tax: the basic exemption does not move

Resident tax (住民税) has its own basic exemption in the Local Tax Act, ¥430,000, and the 2026 reform did not change it. On the three salaries above, the resident tax bill that starts each June is the same as it would have been.

The same reform does change resident tax at the low end, from the bill that starts in June 2027 (on 2026 income). The minimum employment income deduction goes up from ¥650,000 to ¥740,000, which can lower the bill on pay of up to ¥2,200,000, and the income limit for a dependent spouse or relative goes up from ¥580,000 to ¥620,000. The ¥740,000 holds for the bills of fiscal 2027 and 2028 only: ¥50,000 of the rise is temporary, so from fiscal 2029 the minimum is ¥690,000 under the law as it stands.

Questions people ask

Why did my monthly payslips not change in 2026?

The change took effect on 1 December 2026. The monthly withholding tables for 2026 were not changed, so the larger deduction is settled in December’s year-end adjustment instead. The tables are revised from 2027.

Does the change reduce resident tax?

Not through the basic exemption: resident tax keeps its own ¥430,000, so the salaries in this article pay the same. The same reform raises the resident tax employment income deduction minimum to ¥740,000 from the bill that starts in June 2027 (for fiscal 2027 and 2028, then ¥690,000), which can lower resident tax on pay of up to ¥2,200,000.

Do I need to do anything to get it?

Usually not. The employer applies it in the year-end adjustment using the declaration you already file each year. Somebody who files a final tax return (確定申告) applies it there instead.

The calculator uses the 2026 rules for the settled year. For the whole picture on one salary, see what a ¥5,000,000 salary takes home.

This is a general explanation for somebody paid a salary by one employer, with no dependents. Dependents, other income and deductions change the figures; the year-end adjustment or your tax return is the authority on your own year.

Sources

• National Tax Agency — 令和8年度税制改正による所得税の基礎控除の引上げ等について, 令和8年4月 源泉所得税の改正のあらまし (the bands for 2026–2027 and 2028 on, the ¥740,000 minimum, the 1 December 2026 start, and the revised tables from 2027) and 基礎控除の引上げ等関係 Q&A
• National Tax Agency — 令和7年度税制改正による所得税の基礎控除の見直し等について (the 2025 bands) and No.1199 基礎控除
• Local Tax Act (地方税法) 第314条の2 (the resident tax basic exemption)
• Hiroshima City — 令和9年度からの個人市民税・県民税の主な税制改正 and Osaka Prefecture — 令和8年度の主な税制改正の紹介 (resident tax from fiscal 2027: employment income deduction minimum ¥740,000, of which ¥50,000 for fiscal 2027 and 2028 only, dependents' income limit ¥620,000)
• Japan Health Insurance Association (協会けんぽ) — 令和8年度の都道府県単位保険料率 (the new rates from the March 2026 premium, the child-care support levy from the April premium) and Japan Pension Service — 保険料の納付 (the previous month’s premium deducted from this month’s pay)