The inheritance tax basic exclusion and tax-saving measures: understanding the ¥30 million + ¥6 million × statutory heirs rule
Even households that think "inheritance tax has nothing to do with us" are increasingly becoming taxable if they own real estate. The 2015 reform sharply lowered the basic exclusion, and in urban areas such as Tokyo and Osaka it is no longer unusual for even an ordinary detached house to attract inheritance tax.
The inheritance tax basic exclusion
| Number of statutory heirs | Basic exclusion | Notes |
|---|---|---|
| 1 person (e.g., spouse only) | ¥36 million | - |
| 2 people | ¥42 million | e.g., spouse + 1 child |
| 3 people | ¥48 million | e.g., spouse + 2 children |
| 4 people | ¥54 million | e.g., spouse + 3 children |
Before the reform: ¥50 million + ¥10 million × number of heirs. After the reform, the number of households that became taxable roughly doubled. If the inheritance includes real estate, an early estimate is essential.
Inheritance tax rates (amount acquired according to the statutory share)
| Amount acquired according to the statutory share | Rate | Deduction |
|---|---|---|
| ¥10 million or less | 10% | − |
| Over ¥10 million up to ¥30 million | 15% | ¥500,000 |
| Over ¥30 million up to ¥50 million | 20% | ¥2 million |
| Over ¥50 million up to ¥100 million | 30% | ¥7 million |
| Over ¥100 million up to ¥200 million | 40% | ¥17 million |
| Over ¥200 million up to ¥300 million | 45% | ¥27 million |
| Over ¥300 million up to ¥600 million | 50% | ¥42 million |
| Over ¥600 million | 55% | ¥72 million |
What you multiply by the rate matters. The rate is applied to the amount acquired according to the statutory share, that is, the taxable inheritance total apportioned by the statutory shares (rounded down to the nearest ¥1,000). It is not applied directly to what each person actually received[National Tax Agency No.4155]. Even if a will gives one person more, the total inheritance tax is still worked out using the statutory shares[National Tax Agency No.4152].
The flow of the calculation (example: ¥100 million estate, spouse + 2 children)
The National Tax Agency sets out four steps for the calculation[National Tax Agency No.4152].
- Work out each person's taxable value. Land covered by the special provision for small-scale residential land is counted at its reduced value.
- Work out the total inheritance tax. Subtract the basic exclusion from the combined taxable value to get the taxable inheritance total, apportion it by the statutory shares, apply the rate to each apportioned amount, and add the results together.
- Work out each person's tax. Split the total inheritance tax in proportion to the taxable value each person actually acquired.
- Work out each person's tax payable. Subtract the tax credits. If the person who acquired the property is not the spouse, a parent or a child of the deceased, 20% is added to the tax before the credits are subtracted[National Tax Agency No.4157].
Steps ② and ③ are easy to mix up. Step ② uses the statutory shares; what each person actually received only comes into play from step ③[National Tax Agency No.4155].
① Combined taxable value (net estate) = ¥100 million
② Basic exclusion: ¥30M + ¥6M × 3 people = ¥48 million → taxable inheritance total ¥100M − ¥48M = ¥52 million. Apportioned by statutory share: spouse 1/2 = ¥26M (¥26M × 15% − ¥500,000 = ¥3.4M) / the 2 children take 1/4 each = ¥13M (¥13M × 15% − ¥500,000 = ¥1.45M each) → total inheritance tax = ¥3.4M + ¥1.45M + ¥1.45M = ¥6.3 million
③ Split by the actual shares acquired (here, the same as the statutory shares): spouse ¥6.3M × 1/2 = ¥3.15 million / children ¥6.3M × 1/4 = ¥1,575,000 each
④ Tax credits: the ¥50 million the spouse actually acquired is under ¥160 million, so the spousal tax reduction brings it to ¥0[National Tax Agency No.4158] → the tax payable is the children's ¥3.15 million in total
* In practice it often drops further thanks to the special provision for small-scale residential land and the life-insurance exemption, and how much you concentrate on the spouse changes the total including the second inheritance (discussed later). You can also make a rough estimate with our detailed calculation tool. The same steps traced through a ¥80 million example are in inheritance tax rates and the three-step calculation.
Main tax-saving measures you can take during your lifetime
Annual gifting (¥1.1 million a year)
No gift tax arises within the ¥1.1 million annual basic exclusion. This is the most basic way to gradually reduce your inheritance estate during your lifetime. However, gifts to someone who later acquires property in the inheritance are added back for the add-back period. That period is moving from 3 years to 7 years and transitional measures are still running (see the table below)[National Tax Agency No.4161]. For details, see the gift tax exemption.
Using life insurance
Death benefits received by heirs have an exemption of "¥5 million × number of statutory heirs"[National Tax Agency No.4114]. With 3 heirs, up to ¥15 million is exempt. Converting cash into insurance compresses the inheritance estate.
Special provision for small-scale residential land
The land where the deceased lived is reduced by up to 80% (specified residential land, up to 330 m²)[National Tax Agency No.4124]. Land valued at ¥50 million is counted at ¥10 million. Whether you qualify depends on who acquires the land, so check the table below.
Spousal tax reduction
Of the net estate the spouse actually acquires through the division of the estate or a bequest, no inheritance tax arises up to whichever is larger of "¥160 million" or "the amount corresponding to the spouse's statutory share"[National Tax Agency No.4158]. Property not divided by the filing deadline is excluded (attach a "statement of intended division within 3 years after the filing deadline" and divide it within 3 years, and it qualifies). Plan the allocation with the second inheritance in mind as well.
Who can use the small-scale residential land provision (eligibility check)
For the land of the home (specified residential land, 80% reduction up to 330 m²), the requirements depend on who acquires it[National Tax Agency No.4124].
| Who acquires it / situation | Requirements |
|---|---|
| Spouse | No requirements for the acquirer at all (neither residence nor continued ownership is asked) |
| A relative who lived together with the deceased | Must keep living in that building from immediately before the inheritance until the inheritance tax filing deadline, and hold the land until that deadline |
| A child living elsewhere (the "no-home child") | All six requirements must be met. The main four are: the deceased had no spouse; no heir was living in the deceased's home; in the 3 years before the inheritance the acquirer did not live in a house owned by themselves, their spouse, a relative within the third degree or certain related companies; and the land is held until the filing deadline |
| The deceased died while living in a care home | If three points are met — a certification of long-term care need or of support need had been issued; the deceased was in an eligible facility such as a nursing home for the elderly, a special nursing home, a fee-based home for the elderly or housing with services for the elderly; and the vacated home was not rented out or put to business use — the residence before moving in still counts as "the deceased's residential use" |
| A two-household house registered as a condominium (sectional ownership) | Only the part where the deceased lived qualifies. Without that sectional-ownership registration, the part where relatives lived can be included too |
| When the provision brings the tax to ¥0 | You must state in the return that you are claiming the provision and attach documents such as the calculation schedule and a copy of the estate division agreement. In principle the estate must also be divided by the filing deadline, so even at ¥0 tax you cannot get the provision without filing |
Besides the four points above, the six "no-home child" requirements include one on the acquirer's taxpayer classification and one that the acquirer has never owned the house they currently live in[National Tax Agency No.4124]. The provision cannot be used for land acquired by a gift under the settlement-at-inheritance taxation system[National Tax Agency No.4124]. For the full test, see the eligibility check for the small-scale residential land provision.
The add-back period for annual gifts: from 3 years to 7 years (transitional measures still running)
Gifts under calendar-year taxation received by someone who acquires property through the inheritance or a bequest are added to the inheritance estate for the add-back period. Amounts within the ¥1.1 million a year that attracted no gift tax, and gifts made in the year of death, are added back too[National Tax Agency No.4161].
| Date the inheritance starts (date of death) | Add-back period |
|---|---|
| Up to 31 December 2026 | The 3 years before the inheritance starts |
| 1 January 2027 to 31 December 2030 | From 1 January 2024 to the date of death |
| 1 January 2031 onwards | The 7 years before the inheritance starts |
* So for an inheritance that starts during 2026, only gifts within the past 3 years are added back. A full 7 years is added back only for inheritances from 2031 onwards[National Tax Agency No.4161]. Where the inheritance starts on or after 2 January 2027, gifts inside the add-back period other than those in the 3 years before the inheritance are not added back up to a total of ¥1 million[National Tax Agency No.4161]. For the year-by-year cut-offs, see the 7-year gift add-back calendar.
Deadline and method for filing and payment
Even when the tax amount becomes zero by using the special provision for small-scale residential land, the spousal tax reduction, and so on, filing is required in order to apply those provisions. If you miss the deadline, you can no longer use the provisions.
The payment method is, in principle, a lump-sum cash payment. If funds are short, deferred payment (installments) within 10 years, or payment in kind with real estate and the like, are also permitted.
Summary
Think through to the second inheritance
If in the first inheritance (the initial inheritance) you use the spousal tax reduction (exempt up to ¥160 million) to the maximum, that property is taxed all at once in the second inheritance when the spouse passes away. In the second inheritance the spousal tax reduction cannot be used and there are fewer statutory heirs, so the household's total tax burden may actually increase. The key to tax saving is to consider the allocation across both the first and second inheritances together.
FAQ
Will my household owe inheritance tax?
If the total estate exceeds the basic exclusion (¥30 million + ¥6 million × number of statutory heirs), it is taxable. Real estate such as your home is valued using roadside land prices and the like. If it is borderline whether you exceed it, estimate early.
If the tax is zero thanks to a special provision, is filing unnecessary?
No. Even when the tax becomes zero through the spousal tax reduction or the special provision for small-scale residential land, an inheritance tax return is required to receive the benefit. Without filing, you cannot use the provisions.
When is the filing deadline?
Within 10 months from the day after you learn of the start of inheritance (the death of the decedent). Payment is on the same deadline, and, in principle, a lump-sum cash payment.
Is lifetime gifting effective for inheritance tax?
Yes. However, gifts under calendar-year taxation to someone who acquires property in the inheritance are added back. For an inheritance during 2026 the add-back covers the 3 years before it starts; from 2031 onwards it covers 7 years (in between, gifts from 1 January 2024 onwards). The earlier and longer you gift, the better.
Is the rate applied to what I actually received?
No. The rate is applied to the "amount acquired according to the statutory share", that is, the taxable inheritance total apportioned by the statutory shares. What you actually received matters at the next step, when the total inheritance tax is split between the heirs.
Can a child living elsewhere use the small-scale residential land provision?
Yes, if all six "no-home child" requirements are met. The pillars are that the deceased had no spouse and no heir was living in the home, that for the past 3 years you did not live in a house owned by you, your spouse or a relative within the third degree, and that you hold the land until the filing deadline.
Reference links (sources)
This article is based on the following published materials from the National Tax Agency (neutral, primary sources). Valuations and provisions are amended, so please check the latest content before filing.
- National Tax Agency No.4152 Calculation of inheritance tax (in Japanese)
- National Tax Agency No.4155 Inheritance tax rates (in Japanese)
- National Tax Agency No.4157 The 20% add-on to inheritance tax (in Japanese)
- National Tax Agency No.4158 Spousal tax reduction (in Japanese)
- National Tax Agency No.4124 Special provision for small-scale residential land (in Japanese)
- National Tax Agency No.4114 Death benefits subject to inheritance tax (the life-insurance exemption) (in Japanese)
- National Tax Agency No.4161 Addition of gifted property and tax credit (calendar-year taxation) (in Japanese)
* This article provides general information and is not tax advice. For property valuation and filing, please consult a tax office or a tax accountant well-versed in inheritance.
