LDP To Propose Significantly Hiking Taxable Annual Income Threshold; Increase from Previous ¥1.23 Mil. Proposal

The Yomiuri Shimbun

17:27 JST, February 18, 2025

The Liberal Democratic Party was to propose Tuesday significantly raising the annual income threshold above which tax is levied for low-income earners from the current proposal of ¥1.23 million.

The proposal to raise the threshold, currently set at ¥1.03 million, was expected to be made at a meeting of the heads of the tax system research commissions of the LDP, Komeito and the Democratic Party for the People.

The ruling LDP and Komeito had initially aimed to set the limit at ¥1.23 million.

According to a senior LDP official, the ¥1.03 million annual income threshold will be raised to more than ¥1.5 million for individuals earning ¥2 million or less per year. The threshold for individuals with annual incomes between ¥2 million and ¥5 million will also be raised, and for those earning over ¥5 million per year, it will be decided in accordance with the initial target of ¥1.23 million.

The DPFP has been advocating the barrier be raised to ¥1.78 million. There are also calls within the party for an increase to at least ¥1.56 million in accordance with welfare payment amounts.

Meanwhile, Komeito Secretary General Makoto Nishida said relevant measures should also benefit the middle class during a meeting of the secretaries general and other officials of the LDP and Komeito, held in Tokyo earlier on Tuesday.

Regarding the review of the ¥1.03 million threshold, the government and the ruling parties had decided a policy to raise the basic deduction by ¥100,000. They had also decided to raise employment income deduction, which is mainly applied to low-income earning company employees, by ¥100,000 to raise the threshold to ¥1.23 million.