Introduction
In late May to early June 2026, employers will hand out the juminzei kettei tsuchisho (resident tax determination notice) for fiscal year Reiwa 8. This year’s notice carries more weight than usual. The 2026 resident tax marks the first year of a major reform to Japan’s so-called “income walls” (nenshu no kabe).
Households with a spouse working part-time, students working part-time jobs, and parents supporting children aged 19–23 will all see their take-home math change. Here’s what to know.
(Sources: Ministry of Finance: FY2026 Tax Reform Outline (PDF, Japanese), National Tax Agency: FY2025 Tax Reform Revisions to Basic Deduction etc. (Japanese), City of Yokohama: FY2025 Tax Reform Summary (Japanese))
What You’ll Learn
- The “103-man-en wall” expands to “123-man-en”
- The non-taxable threshold for resident tax rises from 100 to 110 man-en of gross income
- A new “specified dependent credit” launches for parents of 19–23 year olds
- All changes apply to resident tax assessed on 2025 income, deducted from June 2026 onward
Disclaimer: This article is based on Ministry of Internal Affairs and Communications publications and municipal sources. Actual tax amounts vary by individual income and household. For specific calculations, consult a tax professional or your municipal tax office.
What’s Changing (Four Points)
1. The minimum employment income deduction (an automatic work-related expense allowance) goes up
The employment income deduction (kyuyo shotoku kojo) is the amount automatically subtracted from your gross salary as a kind of “work-related expense allowance.” For people earning 162.5 man-en or less in gross employment income, the minimum allowance rises from 55 man-en to 65 man-en (the increase phases in gradually for those earning between 162.5 and 190 man-en). That means the taxable income base drops by 10 man-en for the same gross pay, lowering your tax bill.
As a result, the non-taxable resident tax threshold moves from 100 man-en to 110 man-en of gross employment income.
(Source: National Tax Agency: FY2025 Tax Reform Revisions to Basic Deduction etc. (Japanese))
2. The income limit for dependents and spouses widens
“Being a dependent” means that, when a family member earns very little, the working family member who supports them gets a tax break. The income threshold to qualify as a dependent (fuyo shinzoku: a family member you financially support) or same-household spouse (doitsu seikei haigusha: a spouse who shares the household budget) rises from 48 man-en to 58 man-en. Converted to gross employment income, that’s 103 man-en → 123 man-en. This is the headline reform of the “income wall.”
| Item | Old (through FY R7) | New (from FY R8) |
|---|---|---|
| Dependent / same-household spouse income limit | 48 man-en or less | 58 man-en or less |
| Gross income equivalent | 103 man-en or less | 123 man-en or less |
A spouse working part-time can now earn up to 123 man-en and still qualify as a tax-side dependent.
3. The working student deduction (a tax break for student part-timers) also expands
The working student deduction (kinro gakusei kojo) is a tax break for students who earn income from a part-time job. Its income threshold rises from 75 man-en to 85 man-en, which works out to 130 man-en → 150 man-en in gross income.
Students working part-time jobs in Japan, including international students, can earn up to 150 man-en a year and still qualify for the working student deduction.
4. A new “specified dependent credit” (a new tax break for parents of university-aged children) is created
This is a new mechanism. The specified dependent credit (tokutei shinzoku tokubetsu kojo) is a new tax break for parents supporting a child aged 19 to under 23 (typically university-aged). When the child’s total income is between 58 and 123 man-en (or, if employment income only, between 123 and 188 man-en in gross income), the parents get a graduated credit applied to their tax. The resident tax credit is up to 45 man-en (when the child’s total income is between 58 and 100 man-en) and shrinks step by step as the child’s income grows, down to 3 man-en in the 120–123 man-en band.
Until now, a child earning even one yen above the 103-man-en line lost dependent status and the parents’ tax burden jumped all at once. The new design phases the credit down gradually up to 123 man-en.
(Sources: National Tax Agency: No.1177 Specified Dependent Credit (Japanese), City of Yokohama: FY2025 Tax Reform Credit Table (Japanese))
The key point: the wall hasn’t disappeared. It has moved higher, and the burden now increases gradually as you approach it instead of jumping all at once. Full credit applies through 123 man-en, and credit shrinks little by little in the 123–150 man-en range.
When This Takes Effect
All changes apply to the fiscal year Reiwa 8 (FY 2026) resident tax, which is calculated on 2025 calendar-year income and deducted from your salary starting June 2026.
Check the juminzei kettei tsuchisho (resident tax notice) you receive through your employer in late May or early June. If the new rules are applied, the dependent and working-student deduction fields will reflect the new amounts.
Who’s Affected
- Households with a spouse working part-time: the “don’t earn over 103 man-en” rule of thumb shifts to 123 man-en
- International students and university students working part-time: working student deduction extends to 150 man-en
- Parents of children aged 19–23: new specified dependent credit cushions the budget
- Lower-income international workers: gross income up to 110 man-en is now resident-tax-free
If you’re in a household where a spouse works part-time, or you have a child working a part-time job, now is a good time to revisit the yearly hours plan. If you’ve been capping at 103 man-en, expanding to 123 still keeps you tax-favorable. (Note: social insurance “walls” at 106 and 130 man-en are separate rules and still apply.)
Related Reading
Resident tax is a “pay-later” tax: every June, your salary deduction switches to the new fiscal year’s amount. If you arrived in Japan last year, June 2026 is when payroll deductions start for you for the first time. Take-home pay can drop ¥10,000–20,000 a month, so a quick budget review in May is worth it.
For the full picture (the difference between payroll deduction and self-payment, how the December year-end tax adjustment fits in, what happens when you change jobs, and more), see our pillar guide Resident Tax for International Workers in Japan: The Complete Guide. With household fixed costs rising this year, our 2026 electricity and gas price update is also worth a look.
FAQ
Q. So the “103-man wall” is gone?
A. The tax-side wall has moved to 123 man-en. The social insurance walls (106 and 130 man-en) are a separate set of rules and still apply. Check both when planning hours.
Q. What happens to furusato nozei (hometown tax) deductions?
A. Furusato nozei continues unchanged for fiscal year 2026. Check the “donation tax credit” field on your resident tax notice to confirm the amount is reflected.
Q. I’m in my first year in Japan but received a resident tax notice. Why?
A. If you had a registered address in Japan on January 1 of the previous year, you’re taxed. For example, arriving in October 2024 means you were a resident on January 1, 2025 — so resident tax applies to your October–December 2024 income.
Q. I’m leaving Japan. What happens to my resident tax?
A. If you had an address on January 1, you owe that fiscal year’s resident tax in full regardless of when you leave. Before departing, either settle the unpaid balance in a lump sum or appoint a tax agent (nozei kanrinin: a person who handles tax procedures and payments on your behalf, typically a family member, friend, or tax professional based in Japan) to handle the remaining payments. Arrange this at your municipal tax office.
Key Takeaways
- ✅ From June 2026, the resident tax “income wall” rises from 103 to 123 man-en
- ✅ The non-taxable resident tax threshold also moves up, from 100 to 110 man-en of gross income
- ✅ Parents of children aged 19–23 get a new “specified dependent credit,” worth up to 45 man-en
- ✅ Check the juminzei kettei tsuchisho arriving in early June to confirm the new credits are applied
With this reform, the income ceiling that part-time-working spouses and children have been mindful of stretches from 103 man-en to 123 man-en. For households with children aged 19–23, the new specified dependent credit means a child earning more from a part-time job no longer pushes the parents’ tax bill up cliff-style. Note, however, that the social insurance walls (106 and 130 man-en) are a separate set of rules and still apply, so check both when planning hours. The first step is to open the juminzei kettei tsuchisho that arrives in late May or early June and confirm that the new credits are correctly reflected.
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