Japan's NISA Program Explained: Tax-Free Investing Basics
NISA — Nippon Individual Savings Account — is Japan’s tax-free investing system. Ordinarily, investment gains in Japan are taxed at a flat 20.315% (income tax, a surtax, and local inhabitant tax combined). Money held inside a NISA account skips that entirely: no tax on dividends, no tax on capital gains, nothing to declare on those gains at all. It’s not a special fund or product — it’s a tax status you apply to an ordinary brokerage account.
Two pillars, one account
Japan overhauled NISA in January 2024, replacing what used to be several competing, time-limited account types with one permanent structure built from two pillars used together, not chosen between:
- Tsumitate (積立, “accumulation”) — for regular, scheduled investing into a pre-approved list of low-cost mutual funds and ETFs. You can’t lump-sum into this pillar; it’s built around a fixed monthly contribution.
- Growth (成長投資枠) — broader by design: individual stocks, ETFs, and mutual funds, bought as a lump sum or on a schedule, whichever you prefer.
Both pillars live inside the same NISA account and can be funded in the same year, up to their own separate limits.
The actual limits
- Tsumitate: ¥1.2 million per year (roughly ¥100,000/month if you spread it evenly)
- Growth: ¥2.4 million per year
- Combined annual cap: ¥3.6 million across both pillars in a single year
- Lifetime cap: ¥18 million total — of which up to ¥12 million can sit in the Growth pillar, with at least ¥6 million required to come from Tsumitate
Unused annual room doesn’t roll over. If you only invest ¥500,000 in Tsumitate this year, the other ¥700,000 of that year’s allowance is simply gone, not banked for later — the lifetime cap is the only figure that carries forward, tracked by how much you’ve actually contributed, not by market performance.
What changed from the old system
Before 2024, NISA came in separate flavors with real expiry dates: General NISA gave a five-year tax-free window per contribution, Tsumitate NISA gave twenty years, and a since-discontinued Junior NISA covered minors. Once a holding’s window closed, gains going forward became taxable again unless you rolled it into a fresh allowance — a real planning headache for long-term investors.
The 2024 reform removed the expiry entirely. Money inside a NISA account today stays tax-free indefinitely, for as long as you hold it — there’s no year where the clock runs out and the tax status quietly ends.
A note on 2026: NISA is coming back for children
As part of Japan’s 2026 tax reform bills, passed by the National Diet on March 31, 2026, the government reopened NISA-style tax-free investing to children under 18 for the first time since the old Junior NISA was scrapped in the 2024 overhaul. Details are still rolling out through implementing rules, but it’s worth knowing about if you’re tracking this space for a household with kids in it — this wasn’t part of the original 2024 redesign and is a genuinely new 2026 development, not a rebrand of something that already existed.
Can foreign residents actually use it?
Yes, with a real condition attached: you need to be a tax resident of Japan to open and use a NISA account — a short-term visa holder just passing through generally can’t. If you build up NISA holdings while a tax resident and then permanently leave Japan, the tax-free treatment doesn’t follow you: gains become taxable again once your Japanese tax residency ends, so NISA works best as a long-term commitment tied to actually staying, not a tool to open right before departing.
Where NISA fits next to other systems
If you’ve read this site’s UK ISA or Canada TFSA explainers, NISA will feel familiar in spirit — tax-free growth on ordinary investments, no special product required — but the shape of the limit is different. A UK ISA allowance resets every tax year with no lifetime ceiling; NISA’s ¥3.6 million annual figure matters far less than its ¥18 million lifetime cap, since that’s the number that actually runs out. Once you’ve contributed ¥18 million total, you’re done adding new money to NISA for good, regardless of how many years you’ve been investing or how much room came back if you sold something.
That lifetime-cap structure is the one thing worth internalizing before opening an account: NISA rewards starting early and contributing steadily far more than it rewards maxing out any single year, since the total room is fixed no matter when you use it.
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