Japan's government and ruling coalition are reviewing significant tax reforms that could affect both corporate employers and individual taxpayers, including foreign residents. As reported by NHK, three major areas are under consideration for the upcoming fiscal year 2025 tax revision: corporate wage-increase incentives, income tax thresholds, and automobile-related taxes. According to NHK, the government and ruling parties are considering scaling back or revising special tax measures that reduce corporate tax burdens for companies that raise employee wages. These incentives were introduced to encourage salary increases, but officials now argue that with wage growth progressing, the effectiveness of these tax breaks has diminished. For foreign residents working in Japan, this debate is significant because it could affect employer decisions about future salary increases and compensation packages. The revision comes at a time when Japan has seen notable wage growth, with many companies implementing base salary increases in response to inflation and labor market pressures. However, if corporate tax incentives are reduced, some employers may become less aggressive in their wage-increase strategies, potentially impacting the compensation trajectory for all employees, including expats. In a separate development, the Democratic Party for the People (Kokumin Minshuto) met with Liberal Democratic Party tax officials to push for further increases to income tax thresholds, commonly referred to as "income walls" or "nenshu no kabe." As reported by NHK, these discussions also included proposals for new tax reductions aimed at encouraging corporate investment. The income threshold debate is particularly relevant for foreign residents and their families. Currently, Japan's tax system includes several income levels at which tax obligations change significantly. The most commonly discussed threshold is the 1.03 million yen annual income level, above which income tax applies, and the 1.3 million yen level, which affects social insurance obligations. Many part-time workers, including spouses of foreign residents, carefully manage their working hours to stay below these thresholds. Any increase in these limits would allow workers to earn more without facing higher tax burdens or losing dependent deductions. The third major reform under consideration involves automobile taxation. According to NHK, Shunichi Onodera, chairman of the Liberal Democratic Party's tax research commission, indicated that the government is considering suspending the "environmental performance tax" (kankyo seino wari) for two years. This tax is currently levied when purchasing a vehicle, with rates determined by the car's fuel efficiency. For foreign residents who own or plan to purchase vehicles in Japan, this potential suspension could result in significant savings. The environmental performance tax typically ranges from 0% to 3% of the vehicle's value, depending on fuel efficiency ratings. A two-year suspension would eliminate this cost entirely for car purchases made during that period, making vehicle ownership more affordable. This automotive tax review comes amid broader discussions about supporting Japan's automobile industry and encouraging vehicle purchases, particularly as the country transitions toward electric and hybrid vehicles. The suspension could make it an opportune time for foreign residents to consider purchasing a car if they have been delaying such a decision. These three reform areas reflect Japan's ongoing efforts to balance economic growth, tax revenue needs, and support for both businesses and individual taxpayers. For foreign residents, the outcomes of these debates could have practical implications for employment compensation, household income management, and major purchases. As these proposals move through the legislative process, foreign residents should monitor developments, particularly regarding income threshold changes and the automobile tax suspension timeline. Consulting with tax professionals familiar with both Japanese tax law and international tax obligations can help expats optimize their financial planning in response to any implemented changes.