Overview
- Government and ruling parties are discussing tying the basic income tax deduction to consumer prices with reviews every two years, aiming to include the mechanism in the 2026 tax reform outline.
- Officials favor a biennial adjustment to avoid frequent changes to employer withholding and year-end tax procedures while easing household burdens during rising prices.
- Prime Minister Sanae Takaichi told the Lower House Budget Committee she shares concern over the tax threshold issue and will act based on party negotiations.
- Democratic Party for the People leader Yuichiro Tamaki declared support for the ¥18.3 trillion 2025 supplementary budget, making passage by the Dec. 17 session deadline likely.
- The coalition is moving to cap furusato donation resident-tax deductions for individuals earning ¥100 million or more at ¥1.93 million starting with 2027 donations, which implies a deductible donation limit of roughly ¥4.38 million.