What is a "wall"?
The basics of why the income wall affects tax saving and dependent status.
BasicsWhy did ¥1.03M become ¥1.23M?
How the wall is calculated after the reform of the basic deduction and employment income deduction.
ReformSorting out the types of walls
All the tax walls and social insurance walls listed and compared.
ImportantSimulation by income
Comparing old-rule and new-rule deductions by the income of a spouse or child.
CompareCautions and common misconceptions
Sorting out easily-confused points such as "the ¥1.3M wall has not changed."
CautionWhat is an "income wall"?
A "¥X wall" refers to the ceiling that a family member's (a spouse's, child's, or parent's) annual income must not exceed in order for them to be claimed under the dependent deduction or spousal deduction.
If they have only employment income: total income = annual salary − employment income deduction (minimum amount)
→ The "wall" income = basic deduction amount + minimum employment income deduction
When this "wall" is exceeded, the deductions available to the supporting side (the head of household) shrink, and their income tax and residence tax rise. Conversely, if the person stays inside the wall, they can be claimed as a dependent for the full deduction.
How much do taxes rise when someone leaves dependent status?
Why it changed from ¥1.03 million to ¥1.23 million
The "wall" income is determined by the total of the basic deduction + the employment income deduction (minimum amount). Because the FY2025 (Reiwa 7) tax reform raised both of these, the level of the wall rose by ¥200,000.
Checking the mechanism with a formula
[Old] ¥550,000 + ¥480,000 = ¥1.03 million
[New] ¥650,000 + ¥580,000 = ¥1.23 million (from the 2025 tax year)[National Tax Agency: 2025 (Reiwa 7) reform]
* If employment income is exactly the "wall" amount, the "total income" after subtracting the employment income deduction matches the basic deduction amount exactly, and taxable income becomes zero.
When does it take effect?
The new rules apply from income earned January–December 2025 (Reiwa 7). Specifically:
・In the year-end adjustment of November–December 2025, declare spouses and dependents using the new threshold (¥1.23 million)
・In the February–March 2026 tax return (for 2025) as well, likewise use the new rules
Sorting out the types of "walls"
Even though people lump them together as "the income wall," the tax walls (income tax and residence tax) and the social insurance walls (health insurance and pension) are entirely separate rules. This reform changed only the tax walls.
What changed this time is only the income-tax/residence-tax dependent threshold (¥1.03 million → ¥1.23 million). The "¥1.3 million wall" for health insurance and pension remains as before. If your annual income exceeds ¥1.3 million, you leave social-insurance dependent status and separate premiums arise[Prime Minister's Office].
Simulation by income level
We compare how the available deduction changes under the old rules (through 2024) and the new rules (from 2025), by a spouse's annual salary. For cases where the head of household's total income is ¥9 million or less.
Change in deduction by spouse's income
| Spouse's annual salary | Old rules (through 2024) | New rules (from 2025) | Change |
|---|---|---|---|
| ¥1 million or less | Spousal deduction ¥380,000 | Spousal deduction ¥380,000 | No change |
| ¥1.1 million | Special spousal deduction ¥380,000 | Spousal deduction ¥380,000 ✓ | Classification improved |
| ¥1.2 million | Special spousal deduction ¥380,000 | Spousal deduction ¥380,000 ✓ | Classification improved |
| ¥1.25 million | Special spousal deduction ¥360,000 | Spousal deduction ¥380,000 ✓ | +¥20,000 improvement |
| ¥1.3 million | Special spousal deduction ¥310,000 | Special spousal deduction ¥380,000 ✓ | +¥70,000 improvement |
| ¥1.5 million | Special spousal deduction ¥380,000 | Special spousal deduction ¥380,000 | No change |
| ¥1.6 million | Special spousal deduction ¥260,000 | Special spousal deduction ¥380,000 ✓ | +¥120,000 improvement |
| ¥1.7 million | Special spousal deduction ¥210,000 | Special spousal deduction ¥380,000 ✓ | +¥170,000 improvement |
| ¥1.8 million | Special spousal deduction ¥160,000 | Special spousal deduction ¥260,000 | +¥100,000 improvement |
| ¥2 million | Special spousal deduction ¥60,000 | Special spousal deduction ¥110,000 | +¥50,000 improvement |
| Over ¥2.1 million | Not eligible (¥0) | Not eligible (¥0) | No change |
* The deduction category is determined by total income, i.e. annual salary minus the employment income deduction (old ¥550,000 → new ¥650,000). Bold rows are cases where the deduction increased from old to new.
Impact on part-time jobs of children and university students
- If the child's income is ¥1.23 million or less, they qualify for the dependent deduction (¥380,000 for ages 16–18 and 23+; a specified dependent deduction of ¥630,000 for ages 19–22)
- [Newly created] Special deduction for specified relatives: for a child aged 19–22, even if income exceeds ¥1.23 million, ¥630,000 applies up to ¥1.5 million, and the deduction continues in stages from over ¥1.5 million to ¥1.88 million
- Even if a university student works a lot part-time, the parent's deduction (¥630,000) is maintained in full up to ¥1.5 million
- For a child not aged 19–22, exceeding ¥1.23 million makes them ineligible for the dependent deduction (¥380,000)
- The child themselves starts to owe income tax once their income exceeds ¥1.6 million (due to the basic-deduction special provision for 2025 and 2026)
- Income other than salary (contract work, Mercari sales, etc.) requires a separate income calculation
- The social insurance walls (¥1.06 million and ¥1.3 million) do not change with the tax reform
Cautions and common misconceptions
① "All the walls changed" is incorrect
What changed is the income-tax/residence-tax dependent threshold (¥1.03 million → ¥1.23 million), the line where the special spousal deduction becomes full (¥1.5 million → ¥1.6 million), and the line where the person themselves starts paying income tax (¥1.03 million → ¥1.6 million). The social-insurance walls of ¥1.06 million and ¥1.3 million stay the same. If your annual income exceeds ¥1.3 million, you lose social-insurance dependent status and must pay premiums yourself.
② The "¥1.23 million wall" and the "¥1.6 million wall" are different things
The news reported that "the ¥1.03 million wall becomes ¥1.6 million," but in fact you won't get confused if you distinguish two different lines.
③ "Income other than salary" needs a separate calculation
If you have income from flea-market apps, contract work (miscellaneous income or business income), stock dividends, or real estate, you cannot judge by "annual salary" alone. Calculate total income separately for each and check whether it is ¥580,000 or less.
④ The taxes of the spouse and of the person themselves are separate issues
The "wall" is about the deduction that the head of household (the supporting side) can claim. The income tax of the spouse or the student themselves is calculated separately from that person's own income and deductions. As a result of the reform raising the basic deduction, if there is only salary income, there are now many cases where the person owes no income tax up to an annual income of around ¥1.6 million (for 2025 and 2026, due to the added basic-deduction special provision for low earners).
⑤ The residence-tax exemption line (about ¥1 million) does not change
The rough income line at which the residence-tax per-capita levy becomes exempt (about ¥930,000–¥1 million in many municipalities) is not directly targeted by this reform. Where this line is used for things such as the eligibility conditions of various benefit payments (the determination of residence-tax-exempt households), you still need to check it separately.
On the year-end adjustment's "Declaration of Spousal Deduction, etc." and "Declaration of Dependent Deduction, etc." submitted in November–December 2025, enter figures using the new threshold (total income of ¥580,000 or less = annual income of ¥1.23 million or less). There are cases where a family member you could not claim as a dependent until last year becomes eligible this year. Recheck the projected annual income of dependents whose income has risen.
FAQ
In the end, what did the "¥1.03 million wall" become?
It splits into two. You can remain eligible for the dependent deduction and spousal deduction up to an income of ¥1.23 million. Income tax starts to apply to the person themselves from an income of ¥1.6 million (for 2025 and 2026, due to the added basic-deduction special provision for low earners).
Does a university-student child leave dependent status once they exceed ¥1.23 million?
For ages 19–22, thanks to the newly created "special deduction for specified relatives," even if the child's income exceeds ¥1.23 million, the parent can claim the full ¥630,000 deduction up to ¥1.5 million, and it continues in stages from ¥1.5 million to ¥1.88 million.
Did the ¥1.3 million wall also rise?
No. The social-insurance (health insurance and pension) walls of ¥1.06 million and ¥1.3 million have not changed with this tax reform. Above ¥1.3 million you leave dependent status and bear premiums yourself.
From which year's income do the new rules apply?
They apply from income earned January–December 2025 (Reiwa 7). They are reflected in the year-end adjustment at the end of 2025 and in the 2026 tax return (for 2025).
Sources and official information
This article is based on the following official information. Rules can be amended. Please check the latest information on each official site.
- National Tax Agency — Tax Answer No.1199 Basic deduction (in Japanese)
- National Tax Agency — Tax Answer No.1191 Spousal deduction (in Japanese)
- National Tax Agency — Tax Answer No.1195 Special spousal deduction (in Japanese)
- National Tax Agency — Tax Answer No.1180 Dependent deduction (in Japanese)
- Ministry of Finance — Overview of the FY2025 tax reform (in Japanese)
- National Tax Agency — No.1410 Employment income deduction (in Japanese)
- National Tax Agency — 2025 (Reiwa 7) reforms to the basic deduction, employment income deduction, special deduction for specified relatives, etc. (in Japanese)
- Prime Minister's Office — Measures for the so-called "income wall" (in Japanese)
* The content of this article is for informational purposes and is not tax or legal advice. For details of the reform and its application requirements, please check the latest information from the National Tax Agency.