Please find this month’s topics below. We hope they will be useful to you.
▼Taxation
Revision of the Wage Increase Promotion Tax Incentive
Under the 2027 tax reform, the Wage Increase Promotion Tax Incentive, which provides a tax credit based on the year-on-year increase in salaries and wages, will be revised as follows:
1) The incentive applicable to large enterprises will be abolished as of the end of March 2026. This abolition will also apply to domestic corporations whose ultimate parent company (including indirect ownership) is a foreign corporation with stated capital of JPY 500 million or more as of the end of the relevant fiscal year.
2) The incentive for corporations that regularly employ 2,000 or fewer employees will be abolished as of the end of March 2027. Prior to its abolition, the eligibility requirement relating to the increase in salaries and wages for continuously employed employees will be tightened, with the required increase rate raised from 3% to 4%.
3) For small and medium-sized corporations, the additional tax credit linked to an increase in training expenses compared with the immediately preceding fiscal year will also be abolished.
▼Labor Management
Regarding Changes to the Method for Determining Eligibility for Dependent Status under Social Insurance
The Ministry of Health, Labor and Welfare has revised the criteria for determining eligibility for dependent status under Article 3, Paragraph 7 of the Health Insurance Act, effective April 1, 2026. Previously, eligibility was determined based on the projected annual income for the coming year, including estimated overtime pay. Going forward, eligibility will be determined based on the income projected at the time of the employment contract.
Consequently, even if unexpected temporary income results in annual income exceeding ¥1.3 million during the eligibility verification process, this will no longer necessitate changing the dependent’s status.
Source: Treatment of Annual Income in Determining Dependent Status When Annual Income Based on Employment Contract Falls Below the Threshold Amount