Understanding Furusato Nozei: A Guide to Japan’s Hometown Tax

What is Furusato Nozei?

Furusato Nozei is a concept pioneered in Japan in 2008 by the government. The aim is to eliminate the imbalance in the economic sector, where rural regions fall behind the urban ones. 

The program assists rural municipalities to fund local projects and services by enabling taxpayers to contribute necessary taxes. As a thank you for their donation, donors are given tokens of appreciation such as rice, fruits, meat, and hotel vouchers, to mention a few.

Benefits of Furusato Nozei

Furusato Nozei offers several advantages for both the donor and the recipient municipalities:

• Tax Deductions: The donors can get significant tax benefits. Usually, the donation amount minus 2,000 yen can be subtracted from income taxes. This is a good way of minimizing your tax while enjoying the benefits of contributing to a worthy cause.

• Support Rural Areas: The money assists in developing infrastructure, schools, hospitals, and other utilities in the rural regions. It is, therefore, essential to support these communities in enhancing and sustaining such developments.

• Receive Local Products: Incrementally, donors are provided gifts from the supported regions. These could be anything from electricity, food, and beverages to locally made trinkets. No, it is an excellent opportunity to taste the specialties of a particular area.

• Personal Satisfaction: Furusato Nozei allows one to feel that they are making an input, which aids the development of other areas that are less developed. It is a satisfying method to be able to benefit others.

How to Participate in Furusato Nozei

Participating in Furusato Nozei is straightforward. Here’s a step-by-step guide:

Step 1: Determine Your Donation Amount

Determine a percentage you can afford, showing your income level. Different calculators on the internet can be used to estimate the maximum conclusive deductible amount. This is vital in a way that helps achieve optimum benefits in terms of japanese taxation.

Step 2: Choose the Municipality and Gifts

Go to a site like Rakuten Furusato Nozei. Explore the list of municipalities and the gifts they have prepared for their guests. 

To narrow down your results, select product type, geographic area, or if it supports a particular cause. This enables one to get various products that suit your taste and belief system.

Step 3: Make Your Donation

After you have chosen the municipality and the item you wish to receive, place your order and checkout. You will need to enter your personal details and the payment method. It is pretty easy and relatively fast, ensuring that many people can undergo the process quickly.

Step 4: Submit Your Paperwork

You will receive a certificate of your donation, either with your gift or separately. This must also be filed with the tax return to take advantage of the deduction. 

Some municipalities provide combined service for paid employees, making it more accessible. This step is crucial to make sure you get your tax credit.

Step 5: Receive Your Gifts

Now it is time to sit back and wait until you receive your thank-you gift. Delivery duration depends on the municipality as well as the type of the product. This may be the most fun aspect of the process because the giver benefits from the good deeds made.

Connecting Furusato Nozei to Japan Taxation

For anyone currently residing in Japan, obtaining knowledge of Furusato Nozei cannot be overemphasized, as it relates directly with the general subject area of Japanese taxation. Not only does participation in this enable the lowering of income taxes, but it also provides an opportunity to help improve the quality of life in rural Japan.

Like any country, working under the tax laws of Japan can pose a lot of problems for both the expatriates and citizens. However, there are exceptions, such as Furusato Nozei, that make it more rewarding. 

You can reduce your taxes and help various communities in need through your participation. Thus, the linkage between selfish and public interests makes Furusato Nozei a unique and advantageous program.

The Broader Context of Japan Taxation

There are several taxes in Japan, including income, residence, and consumption taxes. These taxes need to be clearly understood by anyone currently residing in the country or planning to be working or living in Japan. For instance, the income tax is progressive, meaning that the taxes imposed rise as the levels of income rise. 

Residence tax is levied according to your official domicile as of January 1st of the specific year for which payment is to be made to the municipality. Consumption tax is similar to the VAT applied to the excise of goods and services. 

If you’re unfamiliar with the taxation system of Japan, check out our guide on taxes in Japan - What Is Japan Taxation? A Guide to Major Taxes and Calculations

Advantages for Expatriates

These taxes are essential for expatriates regarding their financial planning and organizational compliance. Furusato Nozei is one of the most effective means of dealing with your taxes in the best way possible while at the same time supporting a noble course. 

Since monetary contributions are considered deductions, you can lower your tax responsibility. It is most helpful to the expatriates, mainly due to the possibility of encountering different conditions in Japan’s tax regime than in their home country.

October 2025 update: As of October 2025, people who donate to Furusato Nozei will no longer be able to earn points on their donation. For example, if you donated Rakuten Furusato Nozei in September 2025, you would have been able to earn Rakuten points. The Ministry of Internal Affairs and Communication decided to ban point accumulation for furusato nozei, as it was increasing the expenses of local governments.