Furusato Nozei Point Ban (from Oct 2025) and 2026 Rule Changes: A Complete Guide for Sole Proprietors

This article is general information as of August 2026 and is not tax advice. Rules can change. Always confirm the latest details with the Ministry of Internal Affairs and Communications (furusato nozei portal) and the National Tax Agency (donation deduction), or consult a licensed tax accountant.

From October 2025, "point rewards" on furusato nozei (Japan's hometown tax donation program) were banned. Portal sites such as Rakuten can no longer give you their own reward points based on your donation, and in practice the point rewards on most portals ended on 30 September 2025. Some call it a downgrade, but the tax deduction itself has not changed. A further tightening of return-gift rules is scheduled for October 2026. For freelancers and sole proprietors, this is a good moment to review when and how you donate.

What actually changed with the point ban

The Ministry of Internal Affairs and Communications announced that, from 1 October 2025, portal sites may no longer solicit donations by awarding users reward points. Getting a few percent of your donation back as site points is no longer available.

• Covered by the ban: portal-issued reward points tied to a donation.
• Not covered: ordinary credit-card points your card issuer gives for the payment. If you pay by card, your card points still accrue as usual.

The rule change scheduled for October 2026

On 1 October 2026, the "local product" standard for return gifts is expected to be tightened. Because the test for whether a gift is genuinely connected to the donee municipality becomes stricter, some return gifts may change or be discontinued. In short, 2026 is a year where the gifts available before end-September may differ from those after October. If you have a specific gift in mind, donating early is the safer choice.

The deduction mechanism is unchanged

This is the key point. Even without points, the tax benefit works exactly as before:

• Furusato nozei is a donation to a municipality.
• Your donation minus a 2,000 yen out-of-pocket portion is refunded through income tax and reduced from resident tax.
• There is a cap (limit) on the deductible amount, set by your income and family situation for the year.

Donate 50,000 yen within your cap, and 48,000 yen (after the 2,000 yen you bear) is deducted from income and resident tax. You receive the return gift for that 2,000 yen effective cost. The point ban does not change this.

What sole proprietors and freelancers must know

The one-stop exception generally does not apply

The one-stop exception is for salaried employees who do not file a tax return. Because sole proprietors file a return every year, they generally cannot use it. Instead, you claim furusato nozei in the donation-deduction section of your tax return.

Certificates can be consolidated as XML

Instead of attaching a separate receipt from each municipality, you can now submit a single "donation deduction certificate" issued by a qualifying portal, as electronic (XML) data or on paper. Multiple donations consolidate into one file, which works well with e-Tax.

Your cap depends on business income

For a sole proprietor, the limit is based on taxable income for the year (revenue minus necessary expenses and deductions), not salary. Because revenue is hard to predict and expenses vary through the year, how much you can donate this year is often unclear until near year-end. Anything above the cap becomes pure out-of-pocket cost, so understanding your income drives the tax benefit.

Five steps to avoid losing money

1. Estimate this year's income: total your revenue and expenses so far and approximate your taxable income. Undercounting expenses inflates your estimated cap and leads to over-donating.
2. Simulate your cap: from that estimate, calculate your limit and stay a little below it.
3. Secure return gifts early: the October 2026 tightening may change availability, so donate early for gifts you want.
4. Pay by card: site points are gone, but card-issuer points are not covered by the ban.
5. Keep your certificate: retain the donation-deduction certificate or XML data for your return.

A worked example

Consider freelance designer A in 2026: annual revenue of 8,000,000 yen, necessary expenses of 2,000,000 yen, and taxable income of about 4,000,000 yen after deductions. At that level, the furusato nozei cap is often in the high 40,000s of yen (it varies with family circumstances). If A assumes "about the same as last year" and donates 60,000 yen, the excess above the cap is not deducted and becomes a plain loss. Track expenses accurately and A can donate right up to the cap with no waste. With points gone, not exceeding the cap matters more than ever.

Clear expense records make your cap more accurate

Your cap depends on taxable income, and taxable income equals revenue minus expenses minus deductions. So how accurately and completely you capture expenses directly determines the accuracy of your cap simulation. Tools like Denpyo let you photograph a receipt or invoice, and AI extracts the date, expense category, amount and consumption tax automatically. With expenses and projected income visible year-round, it is easier to judge how much furusato nozei you can afford. Pair it with the tax savings estimator and the income tax calculator to approximate taxable income and estimate your cap.

Summary

The October 2025 point ban and the return-gift tightening scheduled for October 2026 are gradually changing how "good a deal" furusato nozei is. But the core benefit — your donation deducted for a 2,000 yen effective cost — remains. For freelancers and sole proprietors, the priority is not chasing points but knowing your taxable income accurately and donating within your cap. Keeping expenses organized and your income visible year-round is the best way to avoid losing money on furusato nozei from here on.