Japan’s 2026 tax reform has increased the immediate-expensing threshold for qualifying small depreciable assets from less than ¥300,000 to less than ¥400,000.
The revised threshold applies to qualifying assets acquired on or after April 1, 2026 by eligible blue-return small and medium-sized businesses and sole proprietors. The annual aggregate limit remains ¥3 million.
The change may benefit eligible businesses purchasing computers, office equipment, furniture, software and similar assets costing between ¥300,000 and ¥399,999. These assets may now be deducted immediately for income or corporate-tax purposes instead of being depreciated over their ordinary useful lives.
Immediate expensing generally accelerates the deduction rather than changing the asset’s total lifetime deduction. Businesses should therefore compare the cash-tax timing benefit with ordinary depreciation and consider the effect on tax provisions and deferred-tax calculations.
Eligibility remains subject to statutory SME requirements. The reform generally reduces the employee-count ceiling from 500 to 400 regular employees, meaning businesses above the new threshold may no longer qualify.
Companies should review fixed-asset additions acquired since April 1, 2026, update their tax-depreciation workpapers and track the ¥3 million annual limit. Required disclosures and supporting asset records should also be maintained even where simplified filing treatment is available.
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