This is a translation of the Japanese original. The Japanese version is authoritative; figures follow Japanese tax law.
The commuting allowance you receive from your employer is free of income tax up to a certain amount, known as the "tax-free limit." The limit for people who commute by car or bicycle changed for commuting allowances paid on or after April 1, 2026 (Reiwa 8). Only two things changed: four new bands were created for one-way distances of 65 km or more, raising the maximum to 66,400 yen a month, and parking fees are now added to the limit up to 5,000 yen a month. For people who travel less than 55 km one way the limit is unchanged, so their take-home pay does not move. Using the National Tax Agency (NTA) Q&A, this article sets out whose take-home pay rises and by how much, and where to look on your pay slip.
The bottom line: only "65 km or more" and "parking fees" changed
| One-way commuting distance | Before (through the March 2026 payment) | After (April 2026 payment onward) | Change |
|---|---|---|---|
| Less than 2 km | Fully taxable | Fully taxable | — |
| 2 km or more, less than 10 km | 4,200 yen | 4,200 yen | Unchanged |
| 10 km or more, less than 15 km | 7,300 yen | 7,300 yen | Unchanged |
| 15 km or more, less than 25 km | 13,500 yen | 13,500 yen | Unchanged |
| 25 km or more, less than 35 km | 19,700 yen | 19,700 yen | Unchanged |
| 35 km or more, less than 45 km | 25,900 yen | 25,900 yen | Unchanged |
| 45 km or more, less than 55 km | 32,300 yen | 32,300 yen | Unchanged |
| 55 km or more, less than 65 km | 38,700 yen | 38,700 yen | Unchanged |
| 65 km or more, less than 75 km | 38,700 yen | 45,700 yen | +7,000 yen |
| 75 km or more, less than 85 km | 38,700 yen | 52,700 yen | +14,000 yen |
| 85 km or more, less than 95 km | 38,700 yen | 59,600 yen | +20,900 yen |
| 95 km or more | 38,700 yen | 66,400 yen | +27,700 yen |
| Parking and similar fees (new) | No add-on | The above + actual cost (up to 5,000 yen) | Up to +5,000 yen |
Source: National Tax Agency, "Q&A on the revision of the tax-free limit for commuting allowances" (April 2026)[NTA Q&A] and Tax Answer No.2585[NTA No.2585]. The tax-free limit for commuting by train or bus (150,000 yen a month) is unchanged.
Before the change, "55 km or more" was a single band, so the ceiling was 38,700 yen no matter how far you travelled. After the change it splits into four bands in 10 km steps from 65 km, and someone travelling 95 km or more one way is tax-free up to 66,400 yen.
Take-home pay rises only for those who actually received more than the limit
The tax-free limit is not "what the employer pays" but "the ceiling on what is free of tax." If your employer's commuting allowance is below the limit, the change adds nothing to your take-home pay. Take-home pay rises for people who received a commuting allowance above the limit and were paying income tax and resident tax on the excess.
| Your situation | Effect of the change |
|---|---|
| Commuting by car less than 55 km one way | No change (the limit is unchanged) |
| 65 km or more one way, with a commuting allowance above 38,700 yen | Take-home pay rises. The income tax and resident tax on the excess disappear |
| 65 km or more one way, but a commuting allowance of 38,700 yen or less | No change. It becomes a question of whether the employer raises the allowance |
| The employer pays your parking fees as a commuting allowance | Tax-free up to 5,000 yen a month. The part that used to be taxed disappears |
| Commuting by train or bus | No change (still a ceiling of 150,000 yen a month) |
For the take-home calculation itself, see calculating take-home pay from your withholding tax slip.
The 5,000 yen for parking: which parking counts, and the order of the calculation
What the revision created is a treatment that adds the parking fee equivalent for parking used for commuting to the limit for your distance band. The NTA Q&A defines the tax-free limit as "the tax-free limit for the applicable commuting distance band plus the monthly parking fee equivalent for that parking (up to 5,000 yen)"[NTA Q&A].
Example from the NTA Q&A: 50 km one way, parking of 8,000 yen a month, and the employer pays a commuting allowance of 28,000 yen plus 8,000 yen of parking, or 36,000 yen in total
Limit for the distance band (45 km or more, less than 55 km): 32,300 yen
Parking fee equivalent: 8,000 yen, capped at 5,000 yen
Tax-free limit: 32,300 yen + 5,000 yen = 37,300 yen
The 36,000 yen paid is below 37,300 yen, so it is entirely tax-free
On the same terms, if the employer pays 40,300 yen: it exceeds the 37,300 yen limit, so 3,000 yen is taxable
- The scope is "parking and similar facilities meeting certain requirements," basically parking used for commuting. Bicycle and motorcycle parking is included as well (Q&A 2-2).
- Where the employer rents the parking and lets you use it free of charge, it usually falls outside salary taxation to begin with, so this add-on does not come into it. The add-on works when the employer reimburses, as an allowance, the fee for parking you contracted yourself.
- The add-on is capped at 5,000 yen. If you receive the full amount of a 10,000 yen monthly parking fee, the part above 5,000 yen is taxable.
Where to look on your pay slip and withholding tax slip
- The "commuting allowance" and "taxable commuting cost" lines on your pay slip — some employers show the tax-free and taxable portions separately. If the taxable portion is zero, the revision has been applied.
- Whether the employer has registered your one-way distance band correctly — if you fall into one of the new bands of 65 km or more but are still registered under the old "55 km or more" band, your allowance keeps being taxed. File your commuting distance with HR again.
- It applies from the April payment — if your employer pays March salary in April, the new limit applies from that April payment. Application is judged by the payment date.
- A tax-free commuting allowance is not included in the "payment amount" on your withholding tax slip — only the taxable portion enters your salary on the year-end slip. For how to read it, see how to read your withholding tax slip.
Only income tax and resident tax are exempt. The standard monthly remuneration that sets your health insurance and employees' pension premiums includes the commuting allowance in full, tax-free portion included. If the allowance rises, premiums rise a little too, so "tax-free" does not mean "no cost at all." For whether commuting allowances count toward the 1.06 million yen threshold, see the 1.06 million yen and 1.30 million yen thresholds.
Why only the 65 km-plus bands went up
The reasons for the revision are rising fuel costs and the fact that, for people making long commutes in rural areas, the old ceiling of 38,700 yen no longer covered the actual cost. Travelling 70 km one way for 20 days a month means 2,800 km of driving. At 15 km per litre and 170 yen a litre, fuel alone comes to about 32,000 yen a month, and with expressway tolls it is not unusual to exceed 38,700 yen. This revision brings the limits closer to actual costs according to distance; it does not raise the limit for people with short commutes. The 150,000 yen for train commuters is also unchanged.
We follow the revision as a whole in our summary of the 2026 tax reform.
What to do today
- Check the taxable portion of your commuting allowance on pay slips from April onward. If you travel 65 km or more one way and tax is still being charged, ask HR to update your distance band.
- Report the parking you contracted yourself to your employer. If the company rules provide reimbursement, you can receive up to 5,000 yen a month tax-free.
- People travelling less than 55 km one way need do nothing. The limit has not changed.
Frequently asked questions
My employer's commuting allowance rules have not changed, so I still get 38,700 yen for 70 km one way. Am I losing out?
Not in tax terms. The tax-free limit is a ceiling on what escapes tax, not an amount the employer is obliged to pay. That said, if your actual costs exceed 38,700 yen, the revision now lets the employer pay up to 45,700 yen tax-free, which gives you grounds to ask for the rules to be reviewed.
Summary
- For commuting allowances paid on or after April 1, 2026, the tax-exempt limit for commuting by car or bicycle has changed.
- Four new brackets were created for one-way distances of 65 km or more, up to a maximum of 66,400 yen a month. Parking fees are also added tax-free up to 5,000 yen a month.
- One-way distances under 55 km, and train or bus commuting (150,000 yen a month), remain unchanged, so take-home pay is not affected.
- Take-home pay increases only for those who were receiving an allowance above the old limit. If your company's allowance is 38,700 yen or less, nothing changes.
- If your one-way commute is 65 km or more but a taxable portion still remains, ask HR to update your distance bracket.
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This article is based on the materials below. Limits change with amendments to the law, so please check the latest content.
Note: this article is general information. Check your employer's commuting allowance rules and the requirements for parking individually. If you are unsure, consult your employer's payroll staff or your tax office.