1. Introduction
The ruling parties announced the 2024 Tax Reform Proposals on 14 December 2023. In the previous News, we mentioned major revised points in the 2024 Tax Reform Proposals. In this News, we will explain a fixed-amount tax reduction from individual income tax and local inhabitant tax in more detail.
2. Fixed-amount tax reduction from individual income tax
① Qualified persons
This special deduction will only be applicable to individuals whose total income amount (including retirement income) for 2024 individual income tax is JPY 18.05 million or less.
② The amount of special tax reduction
The sum of the following amounts will be deducted from individual income tax in 2024.
・Individual / JPY30,000
・Spouse living in the same household or dependents (limited to residents) / JPY30,000 per person
3. Fixed-amount tax reduction from local inhabitant tax
① Qualified persons
This special deduction will only be applicable to individuals whose total income amount (including retirement income) for 2024 local inhabitant tax is JPY 18.05 million or less.
② The amount of special tax deduction
The sum of the following amounts will be deducted from local inhabitant tax in 2024.
・Individual / JPY10,000
・Spouse qualified for deduction or dependents (limited to residents) / JPY10,000 per person
For those spouses living in the same household who are not qualified for spouse deduction, JPY10,000 will be deducted in 2025.
4. Timing of deduction
① Individual income tax
A fixed-amount tax reduction will be deducted from individual income tax withheld from the first salary paid on or after 1 June 2024. In fact, an employer will conduct this special deduction from individual income tax withheld from an employee’s monthly salary regardless of the employee’s income amount and adjust it at the time of the year-end adjustment. In addition, when an employee has side-jobs and receives salaries from several employers, the employer of the primary income source will conduct the special tax deduction.
② Local inhabitant tax (special collection)
An employer will collect the following amount (*) of local inhabitant tax from an employee’s monthly salary paid from July 2024 through May 2025. (An employer will not conduct special collection in June 2024.)
(*) The inhabitant tax amount collected from a monthly salary = (The total amount of local inhabitant tax – a fixed-amount tax reduction for local inhabitant tax) x 1/11
③ Local inhabitant tax (regular collection)
A fixed-amount tax reduction will be deducted from the first term of the payment of local inhabitant tax for 2024.
5. Conclusion
In this News, we mentioned a fixed-amount tax reduction from individual income tax and local inhabitant tax in the 2024 Tax Reform Proposals.
Please note that this News only introduces general outlines and does not include professional advice. So please make sure not to make any decisions without taking professional advice individually. If you have any questions, please feel free to contact us.
(Reference / in Japanese)
Ministry of Internal Affairs and Communications
Deduction from Withholding Tax Amount from Salary Income Regarding a Fixed Amount Tax Deduction from the 2024 Individual Income Tax
https://www.mof.go.jp/tax_policy/tax_reform/outline/fy2024/20240119teigakugenzei.html
（Accessed on 24 January, 2024）
2024 Tax Reform Proposals
https://www.soumu.go.jp/main_content/000919575.pdf
（Accessed on 24 January, 2024）
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