Japan’s ruling parties have approved tax reform guidelines for the next fiscal year, which include raising the minimum annual income subject to taxation.

The Liberal Democratic Party gave the approval during a meeting of its Research Commission on the Tax System on Friday.

Yoichi Miyazawa, who heads the commission, said the LDP is running a minority government, but must come out with policies that address the future as a responsible political party. He said he thinks the party has managed to produce an acceptable outcome.

The approved guidelines state that the minimum taxation threshold will be raised from the current level of 1.03 million yen, or about 6,560 dollars, to 1.23 million yen.

The opposition Democratic Party for the People is calling for a further increase. Taking this request into consideration, the guidelines state that tax reductions will be expanded starting next year with the aim of raising the threshold to 1.78 million yen, or about 11,330 dollars.

The income threshold requirements for reducing the tax burden on households supporting university students and similar dependents will be raised. The dependents currently can earn up to 1.03 million yen, but that will be raised to 1.5 million yen.

Regarding tax increases to secure funding for defense, an income tax hike will be put on hold, while corporate and tobacco taxes will be increased in April 2026.

Komeito also held a similar meeting and approved the tax reform guidelines.