Overview
- The agreement raises the income level at which income tax begins from ¥1.60 million to ¥1.78 million and expands the maximum basic deduction to people earning up to ¥6.65 million, increasing take-home pay for roughly 80% of wage earners.
- Democratic Party for the People leader Yuichiro Tamaki apologized on Dec. 20 for describing the deal as "mission complete" and said the result was a step rather than the final goal.
- Tamaki disclosed that, during talks, the Finance Ministry initially proposed lifting a separate income limit from ¥2.0 million to ¥3.0 million, underscoring the compromises behind the final package.
- Public reaction has been tepid, with disappointment that the relief is smaller than the party’s original push to make ¥1.78 million a uniform, across-the-board threshold.
- An editorial notes narrow measures on very high earners, a plan to add a weight-based tax on electric vehicles while abolishing the environmental-performance levy, no concrete consumption-tax cut, and an income-tax add-on for defense set to start in January 2027.