# Japan's Small-Asset Full-Expensing Limit Rises to Under ¥400,000 (FY2026) > The FY2026 reform raised Japan's small-amount depreciable asset exemption from under ¥300,000 to under ¥400,000. Here is who qualifies, the conditions, and the tax savings for freelancers and SMEs. - URL: https://denpyo.com/en/blog/jp-shogaku-genka-shokyaku-40man-tokurei-2026 - Published: 2026-06-29 - Language: en > This article is general information, not individual tax advice. Whether the small-amount depreciable asset exemption applies to your situation should be confirmed against the latest [National Tax Agency (NTA) guidance](https://www.nta.go.jp/taxes/shiraberu/taxanswer/hojin/5408.htm) and with a licensed tax professional. Ever bought a laptop, camera, or piece of equipment and wished you could deduct the whole cost in one go? For Japanese freelancers, sole proprietors, and small businesses, the **small-amount depreciable asset exemption** lets you do exactly that. And under the FY2026 (Reiwa 8) tax reform, the qualifying purchase price was raised from **under ¥300,000 to under ¥400,000**, with the measure extended for three more years. Here is what changed, who qualifies, and how much tax you can actually save. ## What the exemption is Normally, equipment costing ¥100,000 or more is treated as a fixed asset and written off gradually over its useful life through **depreciation**. A laptop with a four-year useful life, for example, cannot be fully expensed in the year of purchase. The exemption (Article 28-2 of the Act on Special Measures Concerning Taxation for individuals; Article 67-5 for companies) lets blue-return small businesses, including sole proprietors, **deduct the full purchase price in the year of acquisition**. Front-loading the expense reduces taxable income in a profitable year, which in turn lowers your income tax, residence tax, and national health insurance premiums. ## What changed under the FY2026 reform - **Threshold raised to under ¥400,000**: previously under ¥300,000. Equipment in the ¥300,000s can now be fully expensed at once. - **Extended three years**: the deadline moved from 31 March 2026 to **31 March 2029**. - **The threshold depends on the purchase date**: assets acquired on or after 1 April 2026 use the "under ¥400,000" line; assets acquired before that date keep the old "under ¥300,000" line. Even within 2026, a purchase in March versus April is judged differently. - **Employee cap lowered to 400**: for acquisitions from 1 April 2026, the limit on regular employees dropped from 500 to 400. This rarely affects freelancers or micro-businesses. > The change is documented in the [Ministry of Finance FY2026 Tax Reform Outline](https://www.mof.go.jp/tax_policy/tax_reform/outline/fy2026/08taikou_03.htm) and the [SME Agency guide](https://www.chusho.meti.go.jp/zaimu/zeisei/tokurei/syougaku_shisan.html). ## Conditions for using the exemption - **You must file a blue return**: white-return filers cannot use it. If you have not switched, the savings often make it worth doing. - **Purchase price under ¥400,000**: judged tax-exclusive or tax-inclusive depending on your consumption-tax accounting method. - **Acquired and put into business use in the year**: buying is not enough; you must actually start using it for work. - **Annual cap of ¥3,000,000**: the total you can expense under the exemption in one year is capped at ¥3 million; anything above reverts to normal depreciation. - **Attach the detail to your return**: list the asset in the depreciation schedule of your blue-return financial statement and note "措法28の2" in the remarks. ## A worked example Suppose A, a freelance video editor, buys a ¥380,000 laptop in June 2026. Because it is under ¥400,000, it qualifies. - **Using the exemption**: the full ¥380,000 is expensed in 2026. At a combined income- and residence-tax rate of roughly 20%, that is about ¥76,000 in tax saved. - **Normal depreciation**: spread over four years, with only a partial deduction in year one. The benefit is diluted across several years. A ¥350,000 work camera or a ¥280,000 desk set can likewise be fully expensed in the year of purchase, as long as you stay within the ¥3 million annual cap. Concentrating equipment purchases in a high-profit year magnifies the effect. To estimate your own saving, try the [tax savings estimator](https://denpyo.com/tools/tax-savings-estimator). ### How it compares with pricier assets Assets of ¥400,000 or more revert to ordinary depreciation. Items from ¥100,000 to under ¥200,000 also have an alternative, the "lump-sum depreciable asset" method (even three-year write-off). Which route is better depends on your profit picture, so when in doubt use the [expense checker](https://denpyo.com/tools/expense-checker) and consult a professional. ## Receipts and bookkeeping are the key To use the exemption reliably you must keep **evidence showing the price, purchase date, and date put into use** (receipts and invoices). Under Japan's Electronic Bookkeeping Law, invoices received electronically must be stored electronically, and paper receipts can be kept via scanner storage. Tools like Denpyo let you snap a photo of the receipt the moment you buy the gear; the AI reads the date, amount, and expense category automatically and helps you flag whether it is a fixed asset or a small-amount asset. That removes the year-end scramble of entering a shoebox of receipts and makes tracking the ¥3 million cap far easier. Capturing every expense is, in effect, capturing every bit of tax saving. ## Summary The FY2026 reform expanded the small-amount depreciable asset exemption to **under ¥400,000, running through 31 March 2029**. Equipment in the ¥300,000s acquired on or after 1 April 2026 can now be fully expensed at once — great news for businesses that invest in gear. Remember the three pillars: blue return, ¥3 million annual cap, and the purchase-date threshold; digitise receipts as you go; and always confirm the current treatment with the NTA.