The Japanese government has approved a record-breaking ¥122 trillion budget for fiscal year 2026, marking a ¥7 trillion increase from the current year. Alongside this historic budget, the administration has introduced controversial rice voucher programs and significant tax reforms that will impact foreign residents living in Japan. According to NHK, the cabinet approved the budget on December 26, 2025, with plans to pass it through the regular Diet session with cooperation from opposition parties including the Democratic Party for the People. The Constitutional Democratic Party has criticized the budget as prioritizing size over necessity, highlighting the political tensions surrounding the massive spending package. The budget expansion is driven by three main factors: growing social security costs due to Japan's aging population, increased defense spending, and rising debt servicing costs. The latter has become particularly significant as interest rates have climbed, forcing the government to allocate more funds for bond redemption and interest payments. These structural pressures have pushed the general account to unprecedented levels, raising concerns about fiscal sustainability. A centerpiece of the government's economic support measures is the introduction of rice vouchers, distributed through special local government subsidies for food assistance. Agriculture Minister Suzuki announced that municipalities must submit their implementation plans to the national government by late January, with the ministry pledging support for rapid program deployment. However, NHK's nationwide survey reveals significant resistance to the rice voucher program at the local level. In Tokyo's 23 wards and major metropolitan areas, only 40% of municipalities that decided on fund usage chose to implement rice vouchers. The situation is even more stark in regional areas: zero municipalities in Niigata Prefecture—Japan's premier rice-producing region—have adopted the program. Similarly, no municipalities in Tochigi, Yamanashi, or Kagoshima prefectures plan to distribute rice vouchers. Instead, local governments are opting for alternative support measures. Many municipalities, including Saga City and numerous towns in Kagawa Prefecture, have chosen to distribute premium shopping vouchers or electronic gift certificates rather than rice-specific vouchers. In Okinawa, only Naha City, Miyakojima City, and Kitadaito Village have committed to the rice voucher program. In Tottori Prefecture, 11 out of 19 municipalities have explicitly decided against rice vouchers. The reluctance stems from practical concerns about implementation complexity, local economic preferences, and the desire to give residents more flexibility in choosing how to spend support funds. Premium shopping vouchers can stimulate broader local economies while providing recipients with greater choice. Concurrently, the government approved its tax reform outline for fiscal 2026, which includes significant changes to income tax thresholds. The reform raises the minimum taxable income level to ¥1.78 million annually, addressing the so-called "income wall" that has discouraged part-time workers from increasing their hours. This change will reduce tax burdens for lower-income earners, including many foreign residents working part-time or in entry-level positions. For expats living in Japan, these developments carry several implications. The tax reform may provide financial relief for those earning below ¥1.78 million annually, effectively increasing take-home pay. However, the massive budget increase signals continued fiscal pressure that could eventually lead to consumption tax hikes or other revenue-raising measures in future years. Regarding food assistance programs, foreign residents should check with their local municipal offices to understand what support is available in their area. Given the widespread rejection of rice vouchers, many municipalities will likely offer alternative support measures such as shopping vouchers or electronic payment credits that may be more practical for diverse dietary needs. The government aims to pass the budget during the regular Diet session to ensure implementation by the start of the fiscal year on April 1, 2026. Foreign residents should monitor announcements from their local governments in January and February as municipalities finalize their economic support programs and begin accepting applications.