Taxation

Political Parties Propose Major Tax Relief for Foreign Workers in Japan

Opposition parties propose tax cuts and social insurance relief that could increase expats' take-home pay, including consumption tax elimination on food, social insurance rebates, and family tax deductions.

Key Points

  • Social insurance rebate system proposed to reduce premium burden for workers.
  • Food consumption tax could be eliminated starting autumn 2026 under proposals.
  • Dependent deduction for children under 16 may be restored for parents.
  • Proposals remain campaign pledges requiring Diet approval before implementation.
As Japan prepares for upcoming House of Representatives elections, multiple political parties have unveiled ambitious proposals to reduce the tax and social insurance burden on workers and families, changes that could significantly impact foreign residents' take-home pay and living costs. Several opposition parties announced their election manifestos on January 22, 2026, with tax relief and cost-of-living measures forming the centerpiece of their platforms. For expats working in Japan, these proposals could mean substantial changes to monthly deductions and household budgets if implemented. The Democratic Party for the People (Kokumin Minshuto) has proposed creating a rebate system specifically designed to reduce social insurance premiums for working-age residents, according to NHK. Under the slogan "increase take-home pay," the party is also calling for the restoration of the "dependent deduction for minors" (nensho fuyo kojo), a tax benefit for parents with children under 16 years old. This deduction was previously eliminated but would provide tax relief to families with young children, including foreign residents raising families in Japan. Meanwhile, the Chudo Kaikaku Rengo (Center-Right Reform Alliance) has proposed permanently eliminating consumption tax on food items starting autumn 2026, according to NHK. The party's "livelihood first" platform also includes introducing a "benefit-inclusive tax credit" system that would provide either direct payments or income tax deductions based on household income levels. For expats managing household budgets, eliminating the 10% consumption tax on groceries could represent significant monthly savings. More radical proposals have come from Reiwa Shinsengumi, which is calling for the complete abolition of consumption tax, according to NHK. The party's manifesto also includes a universal 100,000 yen cash payment to all residents and measures to reduce social insurance premium burdens on working-age people. If implemented, the elimination of Japan's consumption tax would fundamentally change the cost structure for all residents, foreign and domestic alike. The Social Democratic Party has similarly proposed reducing the consumption tax rate to zero percent while advocating for raising the minimum wage to at least 1,500 yen per hour nationwide, according to NHK. Currently, minimum wages vary by prefecture, with Tokyo's rate at 1,163 yen per hour as of 2025. A uniform national minimum wage would particularly impact foreign workers in lower-wage prefectures. Team Mirai has focused its proposals on family support, announcing plans for "child-rearing tax reductions" that would scale tax relief according to the number of children in a household, according to NHK. This targeted approach could provide substantial benefits to foreign families with multiple children residing in Japan. For foreign residents, these proposals raise important considerations. Social insurance premiums in Japan, which include health insurance, pension, employment insurance, and nursing care insurance, can consume 15-20% of gross salary. Any rebate system or reduction in these premiums would directly increase monthly take-home pay. Similarly, the restoration of dependent deductions for children under 16 would reduce annual income tax obligations for parents. The consumption tax proposals deserve particular attention from expats. Japan's current 10% consumption tax (8% for food and beverages) applies to nearly all purchases. Eliminating this tax on food items or entirely would significantly reduce living costs, especially for families. However, it's crucial to note that these remain campaign proposals rather than enacted legislation. Implementation would require Diet approval and face scrutiny regarding fiscal sustainability and funding sources. The feasibility of these proposals, particularly the complete elimination of consumption tax, remains uncertain given Japan's fiscal constraints and aging society costs. Foreign residents should monitor election results and subsequent policy developments closely, as any implemented changes could substantially affect their financial planning, from monthly budgeting to long-term savings strategies. Regardless of which proposals advance, the focus on reducing worker burdens signals potential relief for Japan's working population, including its foreign workforce.