Raising wages has become almost mandatory in Japan, and the government gives some of it back through tax. The SME wage increase tax credit (賃上げ促進税制, 中小企業者等) lets a company deduct a share of its payroll increase for employees in Japan from corporate tax.
How it works
Compare total pay to employees this year with last year:
- Increase of 1.5% or more: deduct 15% of the increase.
- Increase of 2.5% or more: 15 more points, 30% in total.
- くるみん or えるぼし certification (family and women's support) in the year: 5 more points.
The 10-point add-on for higher training spending does not apply to fiscal years starting on or after 1 April 2026, so for those years the maximum is 35%.
Who can use it
SMEs filing blue returns, for fiscal years starting by 31 March 2027. It only helps if the company pays tax. Directors and certain relatives are not counted in payroll.
Simple example
Payroll of ¥30M last year and ¥31M this year (up 3.3%): the increase is ¥1M. At 30%, the company can deduct up to ¥300,000 from tax, within the legal limits.
Note: rules, amounts and deadlines change every fiscal year and every round. This article summarizes the official sources linked here as of publication and is not legal or tax advice. Always check the latest guidelines (公募要領) before signing any contract.
How KGA IT helps
To raise pay without squeezing cash, a company needs productivity gains. KGA IT automates repetitive tasks, organizes attendance and payroll systems so the numbers for the credit are right, and sets up tools that free up staff hours. Combined with subsidies that require wage increases, the effect is bigger.
- System management: from ¥10,000/month.
- Automation: from ¥49,800.
- App setup: from ¥3,000.
- Digital consulting: from ¥30,000.
KGA IT is not a registered support provider (支援事業者) for any program and does not file applications on your behalf. What we do is handle the IT side: choosing and setting up tools, writing clear quotes, building your website, security and automation, and preparing the technical documents for you or your advisor.
Prices include tax. See the pricing page and all services. We work in 9 languages from Kosai, Shizuoka.
Official sources
Talk to KGA IT
The first consultation is free, with no obligation. Tell us what you want to do and we will show you which IT costs could fit your plan and what they cost. Reach us through the contact page, LINE or WhatsApp.