Furusato Nozei (Japan's hometown tax donation system) is often described as "a donation that comes with a thank-you gift," but from a tax standpoint it is a system where, for a self-payment of just ¥2,000, the amount you donate to the local governments of your choice comes back to you off next year's taxes. The key points are "not exceeding your cap" and "handling the deduction procedure correctly." This article breaks down how the deduction is made up, then organizes the essentials you need today: cap guidelines by income, when to use the one-stop exception versus a tax return, and the ban on portal-site point rewards that started in October 2025.
The mechanism in 3 steps
Donate to a local government
Donate to the local government of your choice via a Furusato Nozei site or similar
A thank-you gift arrives
A local specialty product, targeted at within 30% of the donation, arrives
Taxes are reduced
(Donation − ¥2,000) is deducted from next year's income tax and residence tax
Within your cap, the amount you donate is subtracted from next year's taxes, apart from ¥2,000. Because you receive a thank-you gift (targeted at within 30% of the donation) for an effective burden of ¥2,000, that gift is your practical benefit.
Understanding the "breakdown" of the deduction
People say "donation − ¥2,000" comes back, but in reality it is deducted in the following three parts (in the case of a tax return).
① Income tax refund = (donation − ¥2,000) × income tax rate
② Residence tax, basic portion = (donation − ¥2,000) × 10%
③ Residence tax, special portion = (donation − ¥2,000) × (90% − income tax rate)
The sum of ① to ③ is how "donation − ¥2,000" comes back. The special portion ③ is capped at about 20% of your residence tax income-levy amount, and this is what effectively sets your "deduction cap."[Ministry of Internal Affairs and Communications]
If you use the one-stop exception, the portion equivalent to ① the income tax refund is also included and everything is deducted from the following year's residence tax (the filing-exception deduction). The final self-payment of ¥2,000 and the total deduction amount are basically the same as with a tax return.
Deduction cap (guideline by income)
The cap changes with income and family makeup (based on the special-portion cap in ③ above). The table below is a guideline for someone single with no dependents. It varies with dual-income status and whether you have dependents.
| Guideline annual salary | Deduction cap (single, no dependents) | Gift guideline (at 30%) |
|---|---|---|
| ¥3 million | About ¥28,000 | About ¥8,400 worth |
| ¥4 million | About ¥42,000 | About ¥12,600 worth |
| ¥5 million | About ¥61,000 | About ¥18,300 worth |
| ¥7 million | About ¥108,000 | About ¥32,400 worth |
| ¥10 million | About ¥176,000 | About ¥52,800 worth |
When the mortgage loan credit, the medical expense deduction, iDeCo and the like lower your residence tax income-levy amount, your Furusato Nozei cap also drops. In a year when you combine these, check your cap with the detailed simulator on each Furusato Nozei site (one that lets you enter other deductions), and leave a little margin to be safe.
Procedure: one-stop exception vs. tax return
One-stop exception (for employees who do not need to file a return)
It is available to people who meet all of the following conditions.
- You are a salaried person (or similar) who does not otherwise need to file a tax return
- Your donations for the year go to five or fewer local governments (multiple donations to the same local government count as one)
- For each donation, you submit a "one-stop exception application form" to each local government (it must arrive by January 10 of the following year), with My Number verification documents attached
In recent years, more local governments and sites support online application using a My Number Card. Once you apply, the deduction is taken from the following year's residence tax without a tax return.
Tax return (sole proprietors, six or more local governments, or people with another reason to file)
You enter the donee and amount in the "donation deduction" field of the tax return. You can use each local government's "donation receipt certificate," or the "certificate concerning the donation deduction (XML/paper)" issued by a designated business operator.[National Tax Agency No.1155]
If you file a tax return for the medical expense deduction, the mortgage loan credit (first year), or the like, all one-stop exceptions you have already submitted become void. In that case you must re-enter all donations for that year in the donation deduction of your tax return (watch out for omissions).
[From October 2025] Ban on point rewards
Under a revision of the Ministry of Internal Affairs and Communications' notification, from October 1, 2025, it has been prohibited for portal sites to grant points to donors (point rewards). You can no longer donate on the premise of the "site's own points on top" as before.[Ministry of Internal Affairs and Communications]
Because the across-the-board sweetener of point rewards is gone, from now on you basically choose a donee by the gift itself — its content, its return rate (the standard is within 30% of the donation), and how usable it is. The original deduction benefit of donations (the mechanism where tax comes back for a ¥2,000 self-payment) is unchanged.
Worked example of the effective burden
Deduction cap: about ¥60,000 / Self-payment: ¥2,000 / Gift (at 30%): about ¥18,000 worth
Effective benefit = about ¥18,000 − ¥2,000 = about ¥16,000 worth
* Any amount donated beyond the cap is not deducted and becomes your own cost. If you aim right up to the cap, check with a simulator.
Stumbling points (name and payment)
- Both the donation and the payment in your own name: The deduction applies to the income and taxes of the person who donated. Applying via a family card or in a spouse's name may leave you unable to claim the deduction if the name does not match.
- The year you apply = the year of the donation: What qualifies for that year's deduction is a donation whose payment is completed by December 31 (watch the deadline at year-end).
- Keep the receipt certificate: Keep the donation receipt certificate (or the certificate data), since you use it for the tax return.
FAQ
What happens if I donate beyond the cap?
The part beyond the cap is not deducted and becomes your own cost. You still receive the gift, but there is no tax comeback, so staying within the cap is the basic rule.
Is the amount that comes back different for the one-stop exception versus a tax return?
The total deduction amount (self-payment of ¥2,000) is basically the same. The difference is which tax is reduced: with one-stop the full amount comes from the following year's residence tax, while with a tax return it splits into an income tax refund plus a residence tax deduction.
What do I do in a year I also want the medical expense deduction?
Because a tax return becomes necessary, the one-stop exception is voided. Enter all of that year's donations in the donation deduction field of your tax return.
From October 2025 on, can I no longer get points?
Granting points to donations by portal sites has been banned. You now choose based on the gift's content and return rate.
Summary
Reference links (sources)
This article is based on materials from the public bodies below (neutral, primary information). Since the system may be revised, please check the latest content before donating.
- Ministry of Internal Affairs and Communications — Furusato Nozei portal site (in Japanese)
- Ministry of Internal Affairs and Communications — How Furusato Nozei works (deduction calculation) (in Japanese)
- National Tax Agency No.1155 — Furusato Nozei (donation deduction) (in Japanese)
* This article is general information, not tax advice. For details of your cap or the procedures, check the simulator on each Furusato Nozei site, or your local government or tax office.