Newsletter #002 2026Tax Reform Series – Part 4 Blue Return Special Deduction (Part 1)

Helping foreign business owners understand Japan's tax system—one topic at a time.

What Will Change?

Japan plans to revise the Blue Return Special Deduction starting with 2028 tax returns (for the 2027 tax year), subject to the final approval of the tax reform legislation.

Currently, there are three deduction levels:

• ¥100,000

• ¥550,000

• ¥650,000

Under the proposed reform, there will be four deduction levels:

• ¥0

• ¥100,000

• ¥650,000

• ¥750,000 (new)

The biggest change is the introduction of a new ¥750,000 deduction.

However, taxpayers who continue using the current filing method may still qualify for only the ¥650,000 deduction. To receive the new ¥750,000 deduction, additional requirements must be met.

Why This Matters

If you keep your own accounting records, this proposal deserves your attention.

If you use a bookkeeping or accounting service, now is also a good time to confirm whether your current filing method will qualify for the new maximum deduction.

Planning ahead could reduce your future tax burden.

Key Takeaway

A new ¥750,000 Blue Return Special Deduction is being proposed.

Understanding the new requirements early can help you receive the maximum deduction when the new rules begin.

Coming Next

Blue Return Special Deduction (Part 2)

What conditions must be met to qualify for the new ¥750,000 deduction? We will explain the practical requirements and what business owners should do now.

Prepared by

Kyoji Yasui Tax Accountant Office

Helping foreign business owners understand Japan's tax system with clear, practical guidance.