Furusato Nozei (ふるさと納税) is a special tax contribution program in Japan that allows residents to donate taxes to local municipalities outside their place of residence, instead of just paying to the central tax authority. "Furusato" means "hometown," and "Nozei" means "tax payment," so Furusato Nozei can be understood as "tax contributions to your hometown."
The standout feature of Furusato Nozei is that when you participate, you not only provide financial support to these localities but also get the chance to receive unique gifts from the regions you contribute to. These gifts can include local specialties like rice, seafood, beef, fruits, or onsen tickets. That's why Furusato Nozei not only helps people use their tax money more effectively but also creates opportunities to experience the culture and products from various regions across Japan.
In short, Furusato Nozei is a system where you contribute by purchasing from a specific locality, and a portion of that amount is deducted from your residence tax and income tax according to the formula:
Tax deduction amount = Contribution amount to the locality - 2,000 yen
For example, with an income of 6.5 million yen per year, you can deduct up to about 96,000 yen through the Furusato Nozei program. If you contribute 50,000 yen, you'll get a 48,000 yen tax reduction (50,000 - 2,000 yen), while receiving thank-you gifts like meat, rice, or fruits from the chosen localities. This way, you only spend about 2,000 yen to get products worth tens of thousands of yen if bought directly.
Although it's called “tax contributions to your hometown,” you can choose any prefecture or city in Japan to contribute to, without it having to be your birthplace. Notably, foreigners can also participate in this program, with no restrictions on the number of regions they want to support.
Benefits of Furusato Nozei
Legal tax savings: Participating in Furusato Nozei allows you to deduct taxes (minus 2,000 yen), saving costs effectively.
Receive local gifts: You can get specialties like seafood, meat, or fruits from various regions without much extra cost.
Support local areas: Your contributions help improve infrastructure and living conditions in areas that need support, creating a positive impact.
Flexible choice of contribution locations: You can select any locality in Japan, with no limitations.
Easy registration: The online process is simple; just choose the location, contribution amount, and desired gifts.
Furusato Nozei Process
Here is a detailed process to help you understand Furusato Nozei better:
Contribute via Furusato Nozei: You select one or more localities where you want to send your contribution (寄付金 – きふきん).
Receive receipt and gifts: After the locality receives your contribution, they will send back thank-you gifts (usually local products like meat, rice, fruits) and a contribution certificate (寄附金受領証明書 – きふきんじゅりょうしょうめいしょ) for you to use in tax declaration.
Tax declaration: With the contribution certificate from the locality, you perform the tax declaration (確定申告 – かくていしんこく) at the tax office. This allows you to request a deduction for the contributed amount in the current year.
Income tax deduction for that year: The tax office will process your declaration and apply the income tax deduction for you right in the declaration year.
Municipal tax deduction for the following year: After completing the declaration, the tax office will send this information to your place of residence (ward/city), and the locality will deduct your municipal tax for the next year.
So, in this article, I've introduced the Furusato Nozei system, its features, benefits of participating, and the detailed process. In the next part, I'll share how to calculate the contribution amount and the detailed steps.
Hello everyone. I'm an IT engineer working in Japan. I created this blog to share about life and experiences during my study and work journey. I hope this article will be helpful to you.
