This is an English translation of our Japanese article. The Japanese version and the published materials of the National Tax Agency, the Children and Families Agency and the Trust Companies Association are authoritative. The abolition is a reported policy course, to be finalized in the ruling parties' tax reform outline in December. For individual tax decisions, consult a tax office or a licensed tax accountant.
Last updated: 24 August 2026. Based on Nikkei reporting dated 24 August 2026 and published materials from the National Tax Agency, the Children and Families Agency and the Trust Companies Association of Japan. Every figure is sourced.
What was reported: the supervising agency itself will not seek an extension
On 24 August 2026, Nikkei reported that the Children and Families Agency intends to let the gift-tax exemption for lump-sum marriage and child-rearing funds end with FY2026. Minister for Children's Policies Hitoshi Kikawada explained the measure's "effect has been limited", in the context of the government's review of budgets and special tax measures (Japan's so-called DOGE-style spending review).
The scheme's statutory deadline is 31 March 2027. "Abolished at the end of FY2026" therefore means letting it expire on schedule and not requesting an extension in the FY2027 tax reform.
Not filing an extension request is very close to a final decision. Ordinarily ministries file requests at the end of August and the ruling parties decide in December; a time-limited measure with no sponsoring request simply lapses. How to read this process is covered in our guide to the FY2027 tax reform requests.
The scheme in brief: up to 10 million yen tax-free — with strings attached
Introduced in April 2015, the scheme lets parents and grandparents place funds in a dedicated trust-bank account for a child or grandchild aged 18 to under 50 (with income of 10 million yen or less in the prior year). Up to 10 million yen per recipient is exempt from gift tax, of which wedding-related costs are capped at 3 million yen. Eligible costs include the wedding ceremony and reception, rent and moving costs for a new home (with limits), fertility treatment, prenatal care and childbirth, postnatal care, children's medical costs and nursery fees. Withdrawals require submitting receipts to the bank. The current deadline for contributions is 31 March 2027.
The often-overlooked part is the ending:
- Any balance left at age 50 is subject to gift tax (at the higher general rates for contributions made from April 2023).
- If the donor dies, the unused balance is added back to the estate and taxed with inheritance tax; for grandchildren, contributions made from April 2021 also attract the 20% inheritance-tax surcharge.
Why the effect was "limited" — the numbers and the design
- Barely used. Trust association statistics show 7,907 cumulative contracts in about ten years (September 2024) — roughly 800 per year nationwide. The education-fund version accumulated about 270,000 contracts, some 34 times more.
- Pay-as-you-go support was already tax-free. When parents or grandparents pay wedding, childbirth or childcare costs as they arise, no gift tax applies within what is normally necessary (NTA Tax Answer No. 4405). The scheme only mattered for advance lump sums.
- Weak as an estate-planning tool. Unused balances flow back into the taxable estate, and grandchildren face the 20% surcharge — deliberately designed so it would not become a deathbed-gift loophole.
- Heavy paperwork. A dedicated account, receipts per expense and a separate 3-million-yen wedding sub-cap, for little practical gain.
Lump-sum gift exemptions are closing down, one by one
| Scheme | Tax-free cap | Status |
|---|---|---|
| Education funds | 15 million yen | Ended 31 March 2026 (extension request rejected) |
| Marriage and child-rearing funds | 10 million yen | To end 31 March 2027 (this decision) |
| Housing acquisition funds | 10 / 5 million yen | Deadline 31 December 2026 (still in force) |
How the education-fund version ended is covered in our article on the education fund gift. The backdrop is a broader redesign of gift and inheritance taxation — the look-back period for lifetime gifts extended to seven years, and the new annual 110,000-yen basic deduction under the settlement-at-inheritance system (both from 2024).
Who is affected — and the alternatives
Most families are not affected, because paying costs as they arise remains tax-free. The scheme mattered mainly to elderly grandparents who wanted to set funds aside while healthy, or to move money to grandchildren in a documented way. Alternatives:
- Pay as you go — no cap, tax-free within what is normally necessary.
- Annual gifts within the 110,000-yen exemption — note the seven-year add-back, which however generally does not apply to grandchildren who receive nothing by inheritance or bequest. See our guide to the 110,000-yen exemption.
- The settlement-at-inheritance system — since 2024 it has its own 110,000-yen annual basic deduction with no filing below that amount.
- Last-minute use of this scheme — contracts remain possible until 31 March 2027, but given the age-50 balance tax, the estate add-back and the paperwork, it is not a bargain to grab reflexively. Take professional advice and size it so no balance remains.
For housing support, the separate housing-fund gift exemption (deadline 31 December 2026) still exists — see our housing loan deduction guide.
To do today
- If you plan to support a wedding or childcare, check whether pay-as-you-go covers it — if so, the abolition does not affect you.
- If you already hold a dedicated account, check the unused balance and plan withdrawals against eligible expenses.
- Grandparents considering sizable lifetime gifts should compare annual gifting and the settlement-at-inheritance system with a tax professional.
FAQ
Is the abolition final?
Formally it is decided in the ruling parties' tax reform outline in December. But since the supervising agency itself will not request an extension, and time-limited measures lapse without one, an end on 31 March 2027 is highly likely.
Until when can it be used?
Contributions made under contracts concluded by 31 March 2027 qualify. After that, new tax-free contributions are expected to be impossible.
What happens to existing accounts?
Funds contributed by the deadline can continue to be withdrawn tax-free against receipts until the recipient turns 50. The age-50 balance tax and the estate add-back on the donor's death remain as before.
Will parents paying for a wedding be taxed after the abolition?
Normally no. Support paid as costs arise, within what is normally necessary, stays outside gift tax. Only the advance lump-sum special scheme is ending.
Sources
This article is general information, not advice. The abolition is a reported policy course and may change until the December outline. Consult a tax office or licensed tax accountant for individual decisions.