Many people use the “furusato nozei” (hometown tax). In 2023, the amount of donations through this program reached an all-time high. Some of you might want to try furusato nozei but are unsure how to do it or wonder if you’re eligible.
This includes foreigners living in Japan.
Foreign residents can use furusato nozei just like Japanese citizens. This article explains the basics of furusato nozei, how it works, how to use it, and the tax deductions you can receive.
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Table of Contents
Profile of Writer
Representative of FP Office MIRAI;
Experienced as a Registered Customs Specialist, a bank teller, and transitioned to the path of a financial planner. Founded the financial planning office “FP Office MIRAI” in 2022.
With the motto “Changing the future through reviewing the household budget,” actively engages in household budget consultations, financial article writing, and book supervision, etc.
1st grade Certified Skilled Professional of Financial Planning, Certified Financial Planner®.
If you’re interested in other articles about finance in Japan, such as NISA and taxes, you might find this article helpful.
Chapter 1: What is Furusato Nozei?
Furusato nozei was introduced in 2008 as a system where you can donate to your hometown or other areas to support local governments. Initially, the goal was to reduce the gap between big cities and rural areas and promote regional revitalization. Today, it’s widely known as a system where you can receive gifts and get tax deductions.
Donations made through furusato nozei are treated as tax-deductible contributions. After applying, the entire donation, minus 2,000 yen, is deducted from your income and resident taxes. However, the deduction limit depends on your income and family structure.
Why it is popular?
Furusato nozei is popular mainly because of the gifts you receive from the areas you donate to. You can choose the gift, which is usually worth about 30% of your donation. For example, if you donate 10,000 yen, you’ll get a gift worth around 3,000 yen.
The gifts aren’t just local specialties—some areas offer “experience-based” options as well. Choosing an experience over a product can also help support the local economy.
Another reason for its popularity is the tax deduction. The total amount you donate (minus 2,000 yen) is deducted from your income and resident taxes. For example, if you donate 50,000 yen, 48,000 yen will be deducted from your taxes. This means you can enjoy local specialties for an effective cost of just 2,000 yen.
Donations made through furusato nozei are treated as tax-deductible contributions. After applying, the entire donation, minus 2,000 yen, is deducted from your income and resident taxes. However, the deduction limit depends on your income and family structure.
How Furusato Nozei Donations Are Used?
The use of furusato nozei donations is generally flexible, and local governments decide how to use the funds. Donations can be used for various purposes, and if not immediately used, the money may be saved.
If you are interested in how your donation is used, some local governments allow donors to specify the area their money will support, such as children, education, healthcare, disaster relief, or reconstruction. You can check this on furusato nozei websites.
In addition, crowdfunding-style furusato nozei is becoming more popular. Like regular crowdfunding, this method sets a target amount and specific purpose for the donations, and contributions are collected over a limited period. Although gifts are usually offered, the return rate is often lower than regular furusato nozei, allowing more money to be directed toward the project itself.

Chapter 2: How to Use Furusato Nozei?
You can use furusato nozei by following these steps:
Choose a Local Government
Find a local government you want to support or select based on the gifts you want.Make a Donation
Apply for a donation through a furusato nozei website. If needed, you can also request the “One-Stop Special Application Form” for tax deductions.Receive Your Gift
Get the gift you chose. Depending on the shipping schedule, this step may happen before or after the next one.Receive the Donation Receipt
The local government will send you a “Donation Receipt” and the “One-Stop Special Application Form.” These documents are necessary for your tax deduction, so keep them safe.Complete the Tax Deduction Process
Use either the “One-Stop Special System” or “Final Tax Return” to process your tax deduction.Receive Your Tax Deduction
If you file a final tax return, both income and resident taxes will be deducted. If you use the One-Stop Special System, only the resident tax will be deducted. In both cases, the full amount of your donations, minus 2,000 yen, will be deducted from your taxes.
Furusato Nozei Tax Declaration Process
You can process your tax deductions using one of the following methods:
One-Stop Special System
This system is available for those who do not need to file a final tax return and have donated to five or fewer local governments.If you’re using paper forms, fill out the One-Stop Special Application Form sent by the local government, include identification documents, and mail everything to the local government by January 10 of the following year. The local government will then notify your home local government about your donation, allowing for the deduction on your resident tax in the next fiscal year.
More local governments now offer online applications, making the deduction process even easier, but you must have a My Number card to use this option.
Final Tax Return
If you’ve donated to six or more local governments or if you need to file a final tax return (for example, if your annual income exceeds 20 million yen, or if you have business income, medical expense deductions, housing loan deductions, or dividend deductions), you must report your furusato nozei donations in your final tax return.If you miss the One-Stop Special Application deadline (January 10), you can still receive deductions by filing a final tax return.
When you file a final tax return, part of the tax deduction will be refunded from your income tax, and the rest will be deducted from your resident tax in the following year.
Chapter 3: Understanding Furusato Nozei Refunds
The method you choose for your application (One-Stop Special System or final tax return) affects where and when your tax deductions apply.
Here’s an example:
- Year of Donation: 2024
- Donation Amount: 50,000 yen
- Personal Cost: 2,000 yen
- Tax Deduction Amount: 48,000 yen
If You Use the One-Stop Special System
The entire amount of 48,000 yen will be deducted from your resident tax for the 2025 fiscal year.
If You File a Final Tax Return
You will receive a refund on your income tax based on your personal tax rate applied to the 48,000 yen. The remaining amount will be deducted from your resident tax.
For example, if your income tax rate is 10%, then:
- Refund from income tax: 48,000 yen × 10% = 4,800 yen
- Remaining amount deducted from resident tax: 48,000 yen – 4,800 yen = 43,200 yen
Regardless of the application method, the total amount deducted is the same. Income tax refunds usually take a few weeks to process after the final tax return, while resident tax deductions will apply to the following year’s tax (in this case, for 2025). You can check the details in the “Resident Tax Notification” issued around June each year.
Chapter 4: Important Things to Know About Furusato Nozei
Check Your Deduction Limit
Furusato Nozei has a limit on how much tax you can deduct. This limit varies based on your income and family situation. Even if you have the same income as someone else, your limit might be different.For example, a family of three (two working adults and one middle school child) with an income of 6 million yen can donate up to about 76,000 yen. A family of four (one working adult and three children) with the same income can only donate about 39,000 yen.
Before you start, use a website to check your deduction limit. If you donate more than this limit, you won’t get extra deductions.
Include Furusato Nozei in Your Tax Return
If you file a tax return, you cannot use the One-Stop Special System for that year. If you’ve already applied through this system, it won’t count anymore once you file your taxes.When you file your tax return, remember to include your Furusato Nozei donations in the “Charitable Donations Deduction” section.
Chapter 5: How Foreigners Can Use Furusato Nozei
Furusato Nozei, which means “hometown tax donation,” is open to everyone—both Japanese and foreigners. If foreigners pay income or resident tax, they can receive tax deductions through the One-Stop Special System or by filing a tax return.
Required Documents for Tax Deductions
To receive tax deductions, you need to provide identification documents. If you have a My Number card, you won’t need any additional documents. However, if you don’t have a My Number card, you will need:
One of the following:
- My Number Notification Card
- Resident Certificate with My Number
Plus one of the following:
- Driver’s License
- Passport
- Residence Card
If you don’t have a My Number card, you’ll need more documents, so it’s best to check in advance.
Important Note About Middle Names
To receive tax deductions, the name on your identification documents (like your My Number card, passport, or residence card) must match.
However, many Furusato Nozei websites are designed for Japanese users, and they often only have spaces for a first name and last name, not middle names.
If your middle name is not included when you register your donation, it may lead to a mismatch with your identification documents, and you might not qualify for tax deductions.
If you have a middle name, consider contacting the Furusato Nozei site to ask how to register your name correctly. If you cannot register your middle name, check with the local government office or tax office for guidance on how to proceed.
Chapter8: Summary of Furusato Nozei
Furusato Nozei is a system available to anyone. Foreigners who pay income tax or resident tax can also receive tax refunds and deductions.
Before participating, it’s advisable to use a simulation site to check the estimated limit for tax deductions. If you have a middle name, pay attention to how you register your name when making a donation.