How the Furusato Nozei Limit Is Decided: System, Income & Family Caps
Whether you enjoy Furusato Nozei at an effective cost of just 2,000 yen depends on your limit. We explain the system based on the resident tax income levy, how income and family change it, what changed in 2026, and the procedures.
Furusato Nozei (Japan's "hometown tax" donation system) is famous as a way to receive regional gifts for an effective out-of-pocket cost of just 2,000 yen. The key to making the most of it is your deduction limit (the cap on how much you can donate). Donate beyond the limit and the excess is simply money lost. This guide explains, for beginners, how the limit is determined, how it changes with income and family structure, what the 2026 tax reform changed, and the difference between the procedures.
What the donation limit really means
Furusato Nozei is technically a donation. The portion of your donation above 2,000 yen is deducted from your income tax and resident tax. So if you donate 30,000 yen a year, roughly 28,000 yen comes back as reduced taxes, leaving 2,000 yen as your real cost.
The maximum donation that keeps your real cost at just 2,000 yen is the deduction limit. Within the limit, your self-payment stays a flat 2,000 yen no matter how much you give. Exceed it, and every yen over the cap is no longer deductible. That is why knowing your limit before donating matters most.
To estimate your cap quickly by entering income and family info, use the Furusato Tax Limit Simulator (covers 2026 and 2027 donations).
How the limit is decided (about 20% of resident tax income levy)
People often describe the limit as "a percentage of annual income," but the real basis is not income itself—it is your resident tax income levy (shotokuwari). The deduction is made up of three parts:
- 1. Income tax deduction: (donation − 2,000) × income tax rate
- 2. Resident tax basic deduction: (donation − 2,000) × 10%
- 3. Resident tax special deduction: (donation − 2,000) × (90% − income tax rate × 1.021)
Part 3 is capped at 20% of your resident tax income levy (after the adjustment credit). Parts 1 and 2 grow with the donation, but the point where Part 3 hits its ceiling effectively sets your limit. In short, the higher your resident tax income levy, the higher your limit—which is why higher earners and those with fewer other deductions can donate more.
As a formula, the limit is about resident tax income levy × 20% ÷ (90% − income tax rate × 1.021) + 2,000 yen (the 1.021 reflects the reconstruction surtax). If you pay no income tax, the part in parentheses is simply 90%.
Key point: The limit depends not only on income but on everything that shapes taxable income—social insurance premiums, spouse and dependent deductions, medical expense deductions, iDeCo contributions, and more. Two people with the same salary can have different limits.
A ¥1.93M cap on the special deduction from 2027 donations
From donations made in 2027 (fiscal 2028 resident tax), the Part 3 special deduction itself is capped at ¥1.93M. According to the Ministry of Internal Affairs and Communications, this equals the special deduction of someone earning about ¥100M in salary who donates about ¥4.38M, so it does not affect people with typical incomes.
How income and family structure change the limit
Because the limit is based on taxable income, more dependents generally mean more deductions, lower taxable income, and a smaller limit. Rough guides for donations made in 2026 (estimates only; mortgage or medical deductions will shift them):
| Annual salary | Single / dual-income | Married (spouse no income) | Married + 1 child (HS) |
|---|---|---|---|
| 4.0M yen | ~42,000 | ~33,000 | ~25,000 |
| 5.0M yen | ~57,000 | ~49,000 | ~40,000 |
| 7.0M yen | ~108,000 | ~86,000 | ~78,000 |
| 10.0M yen | ~177,000 | ~167,000 | ~158,000 |
Assumptions: donated in 2026, salary income only, social insurance at 15% of salary, "married" means the spouse deduction applies, a high-school child (age 16–18) gets the general dependent deduction, the resident tax adjustment credit is included, no tax credits such as the housing loan credit, rounded down to the nearest 1,000 yen. These match the default settings of the Furusato Tax Limit Simulator.
"Dual-income" here means the spouse earns over ¥2.07M in salary and is therefore outside the spouse deduction (2026 rules: a spouse earning ¥1.36M or less qualifies for the spouse deduction, and over ¥1.36M up to ¥2.07M for the special spouse deduction). If you support a child aged 19–22, the specific dependent deduction lowers the limit further than the table shows.
The 2026 reform can lower some people's limit
From 2026, the income tax basic deduction rose to up to ¥1.04M and the minimum employment income deduction to ¥740,000, while the resident tax basic deduction stays at ¥430,000. Because the limit is driven by the resident tax income levy, most people's limit barely changes, but anyone who drops one income tax bracket sees a lower limit. A lower bracket means a smaller share is deducted from income tax (Part 1) and a larger share falls on the special deduction (Part 3), which then reaches its cap sooner.
For example, a single person earning ¥5M (same assumptions as the table) could donate about ¥61,000 in 2025 but about ¥57,000 in 2026. People whose income sits just above a bracket boundary are most affected, and salaries of roughly ¥2.2M or less also see a small drop because the higher employment income deduction lowers the resident tax income levy. Don't reuse last year's limit or last year's withholding slip—recalculate with the 2026 rules.
To grasp your real household income, check your net pay with the Take-Home Pay Calculator, and if bonuses are large, also use the Bonus Take-Home Calculator.
One-Stop Exception vs. tax return
There are two ways to claim the deduction after donating.
One-Stop Exception
Available to salaried workers who do not otherwise file a tax return and donate to no more than 5 municipalities per year. You simply submit an application to each municipality, and the entire deduction is taken from next year's resident tax (no income tax refund).
Tax return (kakutei shinkoku)
Required if you donate to 6+ municipalities or already file for medical/mortgage deductions or self-employment. The deduction is split between an income tax refund and resident tax reduction, but the total is designed to be about the same either way.
Note: If you file a tax return after applying for the One-Stop Exception, the One-Stop application becomes invalid—so include your donations in the return that year.
Cautions when calculating your limit
- Use the donation year's income: Donating mid-year means estimating; leave a margin to avoid going over.
- Don't reuse last year's limit: In 2026 the higher basic deduction lowers the limit for anyone who drops an income tax bracket, and last year's withholding slip does not reflect the change.
- Watch overlap with other deductions: Mortgage or medical deductions can lower your limit.
- Simulations are estimates: Aim slightly below the cap rather than at the exact line.
- Donate under your own name: Deductions apply to the donor's income.
Summary
The Furusato Nozei limit is not a simple percentage of income—it is built around roughly 20% of your resident tax income levy plus income and resident tax deductions, and it shifts with family structure. In 2026, the tax reform even lowers some people's limit compared with last year. Start with the Furusato Tax Limit Simulator using this year's conditions and donate just below your cap to be safe.
This article explains the general system only. The figures are estimates based on laws and official materials (National Tax Agency, Ministry of Internal Affairs and Communications) as of October 2026. Final tax amounts and eligibility depend on your situation, so always confirm with your municipality, the National Tax Agency, or a tax professional.
FAQ
What percentage of income is the Furusato Nozei limit?
There is no single percentage. The limit is based on your resident tax income levy (proportional to taxable income), not raw salary, and it shifts with family structure and other deductions. Use a simulator to estimate yours.
What happens if I donate over the limit?
The excess above your cap is not deducted from income or resident tax, so it becomes a pure out-of-pocket cost. You still get the gifts, but no tax benefit—so donate slightly below your cap.
Do dual-income couples have a higher limit?
Yes, generally. If the spouse earns over ¥2.07M in salary (2026 rules) and is outside the spouse deduction, there is less dependent-based deduction, so the limit is as high as for a single person. If the spouse qualifies for a deduction (¥1.36M or less for the spouse deduction, over ¥1.36M up to ¥2.07M for the special spouse deduction), the limit is lower.
Does the Furusato Nozei limit change in 2026?
For most people it barely changes, but anyone who drops one income tax bracket because of the higher basic deduction sees a lower limit than last year (e.g. single, ¥5M salary: about ¥61,000 → ¥57,000). Salaries of roughly ¥2.2M or less also drop slightly. From 2027 donations, the resident tax special deduction is capped at ¥1.93M (relevant only to salaries of about ¥100M or more).
Is the total deduction different for One-Stop vs. a tax return?
The total is designed to be roughly the same. The difference is the source: One-Stop takes the full amount from next year's resident tax, while a tax return splits it between an income tax refund and resident tax.
Do mortgage or medical deductions change the limit?
They can. If those deductions lower your taxable income or resident tax income levy, your Furusato Nozei limit can drop too. In such years, donate with a margin or run a simulation that reflects them.