What are the special tax treatments for certain standard income amounts? [Not applicable to the tax return exemption system]

This special tax treatment for certain standard income amounts was introduced in the 2023 tax reform.

It will be effective from tax returns filed in 2025.

This special treatment will affect the tax payments of high-income earners.

Background of the introduction

Approximately 60% of high-income earners (those earning over 100 million yen) derive their income

not from "salary income"

but from "real estate and stock capital gains."

Income from real estate and stock capital gains is taxed under separate taxation.

Separate taxation involves multiplying taxable income by a fixed tax rate.
(This differs from progressive taxation, where the tax rate increases with income.)

As a result, the phenomenon of the tax burden decreasing once income exceeds a certain threshold has been problematic.
(This is known as the 100 million yen barrier.)

From the perspective of fairness in the tax burden,

a new tax framework has been introduced targeting high-income earners with incomes exceeding 330 million yen.

Calculation method

If 2 below exceeds 1, you will be required to pay additional tax on the excess amount.

1. Income tax calculated using the normal method
2. (Total income - ¥330 million) x 22.5%

22.5% is half of the maximum tax rate of 45%.

The total income amount referred to here is different from the total income amount used to determine dependents and mortgage deductions.

In addition to the normal total income amount, it is calculated as follows:

• After applying loss carryover deductions
• Calculated without applying the exemption from filing
• After deducting the special deduction for real estate transfers

Please note that the exemption from filing does not apply.

• Dividends from listed stocks
• Special accounts with withholding tax

In principle, you do not need to file a tax return.

However, under the special tax treatment,

these amounts are included in the total income amount regardless of whether you file a tax return.

For this reason, it is important to accurately understand your income when filing your tax return.

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都築太郎税理士事務所/Tsuzuki Taro Tax Accountant Office

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