Japan Debates Increasing Income Tax to Fund National Defense

The Yomiuri Shimbun

15:23 JST, December 6, 2025

The government and ruling parties have begun debating on raising the income tax rate by 1 percentage point starting in January 2027 to use in strengthening the nation’s defense capabilities.

They plan to lower the special income tax for reconstruction of disaster-hit areas following the 2011 Great East Japan Earthquake also by 1 percentage point.

By doing so, individual taxpayers’ total burden in a single fiscal year will be unchanged.

The government and ruling parties aim to include the measure in their fiscal 2026 taxation reform outline.

Itsunori Onodera, chairperson of the Liberal Democratic Party’s Research Commission on the Tax System, told reporters after the commission’s meeting on Friday, “There were no objections [about details such as the timing of when to start]. Showing a firm stance about the national security can lead to improvements in deterrence.”

In the government’s fiscal 2023 taxation reform outline, it stipulated that the rates of corporate tax, tobacco tax and income tax will be raised so that the government secures more than ¥1 trillion a year of additional tax revenue in fiscal 2027 to strengthen defense capabilities.

Though it was decided to raise the corporate and tobacco taxes starting in April 2026, the decision about when to start raising income tax had been postponed.

The special income tax for reconstruction is a time-limited measure that continues until the end of 2037, but the government is considering extending it.

As the tax raise for defense purposes is a permanent measure, the tax burden on people will rise in the long-term.