[Guide] Furusato Nōzei: Get Local Gifts & Tax Breaks by Donating to Japanese Small-Towns

With rural-to-urban migration growing, fewer working citizens are paying taxes in their hometowns, leaving many municipalities with little funds to keep themselves afloat.

The hometown tax program (hereafter referred to as the Furusato Nōzei program) was first announced 2007 as a way to fight the deterioration of rural Japan. The program encourages people in cities to donate to independent producers around the country in exchange for a credit on their income and resident taxes.

For this “donation”, you can get anything from premium meat and cheese to pottery and other artisanal goods from just about anywhere in Japan. Because taxpayers can choose which jurisdiction their donation will go to, they can have a direct impact on the revitalization of rural Japan.

Table of Contents

1. How does the Furusato Nōzei program work?

   1. How much of a tax deduction do donors receive?

   2. What is the procedure for receiving tax deductions? - Satofuru is your hero!

   3. Deadline?

2. Best websites to look for Furusato Nōzei gifts?

3. What are some Furusato Nōzei gifts?

4. Conclusion

1. How does the Furusato Nōzei program work?

Furusato Nōzei allows taxpayers to give monetary donations to a prefecture, city, town or village of their choice.

In return, the recipient local government sends the donor a gift often a local specialty or food unique to the area. Donors also receive a certificate to be used for a tax deduction.

All 1,788 prefectures and municipalities except for three, the Tokyo Metropolitan Government, Sumoto in Hyogo Prefecture and Tsuno, Miyazaki Prefecture, participate in the program.

Taxpayers can freely donate to any location, but they are ineligible to receive gifts from the prefecture or local municipality where they reside.

The best part, non-Japanese residents are eligible as long as they pay income and residential taxes in Japan.

a. How much of a tax deduction do you receive?

The maximum deduction depends on the donor’s income, marital status and number of dependents, but a simple explanation is that the tax break applies to the amount of donation exceeding ¥2,000.

One example estimate provided by the internal affairs ministry shows that the maximum deduction for a single person with an annual income of ¥10 million is roughly ¥180,000. If that person uses his full donation allowance, he will receive everything back in tax deductions except ¥2,000.

One of the reasons for the program’s popularity is that it offers regional specialty items, which can be expensive, for only ¥2,000.

For instance, many municipalities offer 15 to 20 kilograms of locally grown rice as gifts to those who donate ¥10,000. Once the tax deduction is applied, the donor has essentially paid only ¥2,000 for such a large amount of high-quality rice which is much cheaper than they would have paid at their local store.

b. What is the procedure for receiving tax deductions? - Satofuru is your hero!

Normally, if you want to receive a donation deduction through hometown tax payment, you need to file a tax return.

However, if you are working for a company or have undergone year-end tax adjustment, you can receive a donation deduction without filing a tax return by using the so-called Satofuro One-Stop Exemption System (JP).

Satofuro is so modern that they even have an app where you can do the whole process online:

Download the Furusato Tax Satofuru app here (free):

Satofuru App store link

Satofuru Google Play link

c. Deadline?

Since Furusato accepts applications 24 hours a day, 365 days a year, there is no such thing as an application period for Furusato tax payment itself. In other words, the application period for Furusato Tax is from January 1 to December 31 every year. However, if you want to receive income tax refund and inhabitant tax credit by donating to Furusato, you need to pay attention to the application period.

The deadline for applying for the One-Stop Special Exception System is January 10 of the year following the donation.

2. Best websites to look for Furusato Nōzei gifts?

These are the top 5 websites in Japan to look for Furusato Nōzei gifts [JP]:

1. Rakuten Hometown Tax Payment (up to 30% Rakuten point reward)

2. Furunavi (Up to 20% Furunavi Coin Point Reward)

3. Hometown Choice (No. 1 by the number of users)

4. Furusato Premium (Amazon Gift Certificate up to 13% Reward)

5. Satofuru (The official government sponsored website)

English websites are rare, but the best known one is Furusato Japan, which is a newly started website that so far has partnered with four municipalities.

As a bonus, I have thrown in a website that lists all Furusato Nozei gifts by cost/perfomance (JP): Hometown Tax Return Rate Ranking Best 300

NOTE: Remember that you must confirm that you want to use the One-Stop Special Exception System for each order on these websites.

What are some Furusato Nōzei gifts?

Here are some hand-picked example gifts that you can receive from participating in the Furusato Nōzei program:

• Emperor Salmon【1kg】from Shiranuka, Hokkaido

  

• 2023 Harvest Pre-Order - Carefully selected Shine Muscat grapes directly from the fruit kingdom Yamanashi

• Kyoto ¥15,000 JTB Sightseeing Spot Support Hot Spring Sightseeing Travel Hotel Coupon

  

• Black Hair Princess Beef Ultimate Potato & Premium Power Pizza from Kagoshima, Kyushu

4. Conclusion

I have tried Furusato Nōzei in the past and think it’s an excellent way to try out the amazing delicacies and crafts that Japan has to offer.

That you also support local economies and rural villages makes the delicacies even tastier!

If you are a tax-paying resident in Japan, there is really no reason not to participate in this program, so get on it right now!

NOTE: You need to apply for your Furusato Nōzei gifts before December 31st, 2022, if you want to deduct them from your 2022 taxes!