Tokyo, Dec. 11 (Jiji Press)–The Japanese government and the ruling coalition are considering limiting tax deductions for “furusato nozei” hometown donations by individuals with annual income of 100 million yen or higher, people familiar with the matter said Wednesday. Under the furusato nozei system, the amount of donations to municipalities minus 2,000 yen is deducted from the donor’s residential and income taxes. Donors can receive gifts in return. Critics say that the system allows high-income earners to enjoy large tax deductions and receive expensive gifts. Government and ruling coalition officials are considering limiting the amount of residential tax deductions under the system to 1.93 million yen for individuals with annual income of 100 million yen or higher, starting with donations in 2027. The maximum amount of donations eligible for residential tax deductions will be some 4.38 million yen. The restrictions will be included in the government’s annual tax system reform package for fiscal 2026. END [Copyright The Jiji Press, Ltd.]
Japan to Limit Tax Deductions for “Furusato Nozei” Donations
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