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What Is Furusato Nozei? The Japanese Tax Benefit That Gets You Free Stuff

Furusato nozei lets you prepay tax to local areas and receive great gifts. The best part is anyone paying taxes in Japan can participate.

By Adam Douglas Sep 11, 2024 6 min read

Let’s face it: doing your taxes is no fun. This is especially true if you live in Japan, where it can come with all sorts of complications due to the language and an unfamiliar tax system. However, your taxes can be a little more fun, thanks to “Furusato Nozei.”

Translating roughly to “hometown tax,” it’s a program that lets you shift a portion of your income tax payment to different municipalities and get gifts in return. We’re talking about high-class stuff, too, like wagyu beef, expensive fruit, local crafts and even experiences like driving a train. You’ll have to pay that money anyway; why not get some cool stuff for your troubles?

That said, here is a quick guide to how furusato nozei works and how to do it.

What Is Furusato Nozei?

furusato nozei tax gifts — It’s not really a “gift,” but you should use it anyway.

Furusato nozei (ふるさと納税) is a program created by the Japanese government in 2008 to help divert much-needed income tax to local municipalities hit hard by urbanization. Rather than pay all of your income tax to the place you live, you can divert some of it to a local area of your choosing. The original idea was that it would be your hometown (the furusato part), but it doesn’t have to be. Anyone can contribute to any area, regardless of connection.

Essentially a donation, you prepay a certain amount of your income tax (there’s a limit—see below) to a municipality. In return, you can claim a gift worth up to 30% of the value of the donation. Don’t think of it as shopping. Think of it as getting a gift for sending a portion of your residence tax to an alternate area and getting a reward. You will pay this tax regardless. Only now can you get something in return—besides all those sweet improvements to society your taxes already pay for (in theory).

Anyone living and paying taxes in Japan can participate. You don’t have to have a Japanese hometown to use the program. You may want to support an area that you feel deserves it, such as a city where you lived as an ALT or one that recently experienced a natural disaster. But you don’t have to. You could donate to areas strictly based on the gifts offered. It’s up to you.

How Do You Use Furusato Nozei?

Peaches furusato nozei tax fruit — Pay your taxes and eat a month’s worth of peaches!

Because Furusato Nozei is a tax-deductible, government-sponsored program, there are several rules you have to follow. You can’t just click “buy now” on a website and get some cool knives.

The four steps to follow are:

Calculate how much you can donate in a year.
Make a “donation” and receive your gift.
Get the official certificate of donation in the mail.
Declare your contribution when you file your taxes OR apply for the one-stop exception system.

Because you still need to pay taxes to your own local area, there’s a limit to how much you can spend on furusato nozei in a calendar year. To determine your limit, you’ll need to use a calculation website, such as this thorough one or a simplified one (both sites are in Japanese).

In general, someone making 5M Japanese yen yearly can donate ¥40,000 to ¥60,000 in a single calendar year. There’s a yearly fee of ¥2,000 as well. Check with a licensed tax accountant if you have any questions.

Furusato Nozei Sites

furusato nozei vegetables delivery — You can receive tons of vegetables, too.

There are many different furusato nozei sites, from those run by individual local municipalities to specialty sites that collect all participating areas onto one page. Note that these are all in Japanese. Use the translation function in your browser if you can’t understand.

You can search by municipality or gift type. The time it takes to receive a gift can vary. This is not Amazon, so don’t expect overnight service.

Some great furusato nozei sites are:

Furusato Choice: Offers a large selection of municipalities and gifts.
Furusato-Tax: Offers a dedicated English page, making it a great option for non-Japanese speakers who want to participate.
Furunabi: Another easy-to-use, general-purpose furusato nozei platform.
ANA: Run by the airline ANA; earn airline miles with your donations.
JAL: If you have a JAL Mileage Card, you can donate and collect miles.
Rakuten: If you already use Rakuten, it’s convenient and lets you earn and use Rakuten points.

How Do You Submit Documents at Tax Time?

mail box in Japan — Just fill out the form sent to your home and drop it in the mail box.

How you declare your donations depends on whether you have to prepare your taxes. If you are self-employed or regularly handle tax preparation independently i.e. you prepare a kakutei shinkoku (income tax return), you’ll need to submit the official receipts sent to your house after every donation along with your other forms and receipts.

Whenever you donate to a furusato nozei location, you will receive a paper receipt in the mail a few days after the transaction. This is proof of your donation. When you prepare your tax report, you must declare each one as a donation. Make sure that the slips contain the donated amount and date. Any donation made during the calendar year (Jan.1-Dec. 3) can be included when you file your taxes the following spring.

If, however, you are a salaried company employee and your company handles that for you, your port of call is the one-stop exception system.

What is The One-Stop Exception System?

The one-stop exception system was created to allow salaried employees to participate in furusato nozei. Instead of submitting a receipt, you must complete an application form for each donation. This will either come in the mail after your payment or be part of the online ordering process. Your donation amount will be subtracted from your residence tax payment starting in June of the following year.

When you select your gift, you must indicate that you want the application form for the one-stop exception system. Look for “ワンストップ特例制度 (wansutoppu tokureiseido, one-stop special system)” in Japanese.

Note that you are limited to five donations per calendar year. You must submit a tax report if you make more than five donations.

Recommended Furusato Nozei Gifts

furusato nozei knife knives — Now, you have no reason not to own an expensive Japanese knife.

Here are some popular furusato nozei gift ideas:

High-Quality Knives (Fukui Prefecture): Handcrafted Japanese knives, perfect for chefs or collectors.
Rice (Niigata Prefecture): Premium Koshihikari rice, known for its exceptional taste and texture.
Wagyu Beef (Miyazaki Prefecture): Award-winning Miyazaki Wagyu beef, prized for its marbling and flavor.
Seafood (Hokkaido): Fresh seafood like salmon, crab and scallops is a favorite for sushi lovers.
Fruits and Vegetables (Yamanashi Prefecture): Seasonal fruit and vegetable deliveries throughout the year, including peaches, grapes, and cherries.
Sake (Niigata Prefecture or Yamagata Prefecture): Premium sake from famous brewing regions, ideal for Japanese rice wine enthusiasts.
Ceramics (Saga Prefecture): Beautiful, traditional Arita porcelain for art and craft lovers.
Craft Beer (Nagano Prefecture): Unique craft beer sets from Nagano’s growing beer scene.
Green Tea (Shizuoka Prefecture): High-quality green tea, perfect for tea enthusiasts.
Honey (Kumamoto Prefecture): Natural, locally produced honey with various flavor options.
Venison (Hokkaido or Nagano Prefecture): Fresh, locally sourced venison, popular for its rich flavor and lean meat.
Domestic Trips: Some donations even include domestic travel packages to popular destinations around Japan.