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The cap on tax credit for employment income may be decreased as follows:
Japanese yen
Current rule
Amended rule
Year 2017
After Year 2018
Employment income
15,000,000
12,000,000
10,000,000
Income deduction cap applicable
2,450,000
2,300,000
2,200,000
Employment income deduction is a deduction for a taxpayer who has to incur necessary expenses in order to earn the salary and bonus income. The deduction amount varies depending on the annual employment amount. The tax reform of 2012 stipulated the cap amount for the taxpayer whose employment income is over 15,000,000 yen, but the tax reform of 2014 has lowered the cap amount in two phases as shown in the table above. As a result, the taxable income in accordance to the amended rule will be larger compared to that of the current rule. Further, the inhabitant tax will become greater because it correlates with the larger taxable income.
