Newsletter #0032026 Tax Reform Series – Part 5 Blue Return Special Deduction (Part 2): How to Qualify for ¥750,000

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

What Is Required for the New ¥750,000 Deduction?

Starting with income tax for 2027, the maximum Blue Return Special Deduction will increase from ¥650,000 to ¥750,000.

However, the new ¥750,000 deduction will not be available automatically.

To qualify, a taxpayer must generally meet the following requirements:

• Keep proper accounting records using double-entry bookkeeping

• File the tax return by e-Tax before the filing deadline

• Meet additional digital record-keeping requirements

The additional requirements include either:

• keeping high-quality electronic accounting records, or

• using an approved digital system to save certain electronic transaction data

A notification must also be submitted to the tax office by the filing deadline for the year in which the taxpayer first applies for the ¥750,000 deduction.

What Should You Check Now?

If you prepare your own accounts, check whether your accounting software and record-keeping system can meet the new requirements.

If you use a bookkeeping service, ask your service provider:

“Will my current accounting system qualify for the new ¥750,000 deduction?”

Using accounting software does not automatically mean that all the new requirements are satisfied.

Early preparation is important because changes to accounting systems and bookkeeping procedures may take time.

Key Takeaway

The new ¥750,000 deduction offers an additional ¥100,000 deduction, but it requires more than simply filing a tax return electronically.

Business owners should review their accounting system, digital record-keeping, and filing method before the new rules begin in 2027.

Coming Next

Next, we will return to the 2026 Tax Reform Series and look at another important tax topic for business owners in Japan.

Prepared byKyoji Yasui Tax Accountant Office

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