Lump-Sum Gift Settlement Simulator | Estimate Combined Gift & Inheritance Tax (Japan)
A free simulator that estimates the gift tax due under Japan's lump-sum gift settlement system (相続時精算課税) and the final inheritance tax owed when the donor passes away (including the gift tax credit and any refund). Calculations reflect the 1.1 million yen basic exemption and 25 million yen special exemption.
Lump-sum gift settlement (相続時精算課税) is one of two ways gifts can be taxed under Japan's tax code, and it can be chosen in place of the standard calendar-year taxation (暦年課税) for gifts made from the year it's elected onward. It keeps the tax burden low at the time of the gift, and instead settles the account later by adding the value of the gifted assets back into the estate when the donor dies.
Requirements and Exemptions Under Lump-Sum Gift Settlement
| Donor (the person giving) | A parent or grandparent aged 60 or older |
|---|---|
| Recipient (the person receiving) | A child or grandchild aged 18 or older |
| Basic exemption (annual, per recipient) | 110万 JPY |
| Special exemption (lifetime total, per donor) | 2,500万 JPY |
| Tax rate on amounts over the special exemption | 20% |
The 1.1 million yen basic exemption applies every year per recipient (if the recipient receives gifts from two or more donors under this system in the same year, it is apportioned among them in proportion to the gift amounts), and gifts within this amount don't need to be added back into the estate at inheritance. The 25 million yen special exemption is a lifetime total per donor, and it can be used up gradually across multiple years.
Simulate the Tax From Your Gift and Estate Assets
The settlement-at-inheritance gift tax system
This is one of the two ways Japanese gift tax can be levied. It may be elected for gifts from a parent or grandparent aged sixty or over to a child or grandchild aged eighteen or over, and once elected, all subsequent gifts from that donor are handled this way rather than under annual taxation. The trade is that tax at the time of the gift is kept light, but when the donor dies the value of the gifted property is added back into the estate and settled.
A basic deduction of 1.1 million yen was introduced in 2024. It applies each year per recipient (apportioned among donors in proportion to their gifts if the recipient receives gifts from two or more donors under this system in the same year), and crucially gifts within it need not be added back into the estate at all. Beyond that, a special deduction of 25 million yen serves as a lifetime allowance per donor, with a flat twenty per cent gift tax on anything above it. Once elected, there is no returning to annual taxation. Enter the gifted property and the expected estate and this tool estimates the tax at the time of the gift and the final amount due at inheritance, including the credit and refund for gift tax already paid.
Sources used in this calculation
Statutory figures such as tax and insurance rates come from the public bodies listed below. They change when the law is revised, so please also check the primary source before relying on the result for an important decision.
- Basic deduction, special deduction and rate of the settlement-at-inheritance gift regime — National Tax Agency (国税庁) Effective from 2024-01 ／ Last checked 2026-09-19
- Japanese inheritance tax rate table and basic exemption amount — National Tax Agency (国税庁) Effective from 2015-01 ／ Last checked 2026-09-17
How to estimate the burden
- Enter the value of the gift The assessed value of the property being given in that year.
- Enter the special exemption already used The cumulative special exemption used on past gifts from the same donor. Leave it at 0 if this is the first gift under the system.
- Enter the value of the estate What you expect to remain at the eventual inheritance.
- Enter the composition of the heirs This determines the basic deduction and which tax rates apply.
- Read the combined burden You see the tax at the time of the gift, the final amount due at inheritance, and their total.
Tips for getting more out of it
- Gifts of 1.1 million yen or less (the basic exemption) are not only free of gift tax — they also don't need to be added back into the estate at inheritance, so spreading gifts across several years within this exemption is an effective way to reduce the overall tax burden.
- You don't have to use the entire 25 million yen special exemption at once — it can be drawn down gradually over multiple years until it's used up.
- Gifting an asset expected to rise in value (such as shares in a family business or real estate) early, while its assessed value is still low, means that value gets locked in: even if the asset is worth more by the time of inheritance, it's added back to the estate at its lower value at the time of the gift, so future appreciation escapes inheritance tax.
- You can compare this against calendar-year taxation (which uses the annual 1.1 million yen basic exemption every year) with our related lifetime gift planner tool.
Where this helps
Passing on an asset likely to appreciate
What is added back is the value at the time of the gift, so the more an asset appreciates, the better this works.
Comparing against annual taxation
Since the election cannot be reversed, it is worth modelling both before choosing.
Considering gifts of up to 1.1 million a year
Since 2024 this band needs no adding back, so it serves as a straightforwardly advantageous allowance.
A family unlikely to owe inheritance tax at all
Where the estate falls under the basic deduction anyway, paying gift tax may simply leave you worse off.
Gift tax terms explained
- Settlement at inheritance
- The system taxing lightly at the time of the gift and settling by adding back at inheritance. There is no reverting to annual taxation once elected.
- Annual taxation
- The ordinary gift tax system, with an annual basic deduction of 1.1 million yen.
- The 1.1 million yen basic deduction
- The annual deduction introduced in 2024 for this system. Gifts within it need not be added back into the estate.
- The 25 million yen special deduction
- A lifetime allowance per donor, which may be drawn on across several years.
- Adding back
- Bringing gifted property into the estate. The amount added is fixed at the value it had when given.
- Gift tax credit
- The mechanism deducting gift tax already paid when the inheritance tax is computed. Any excess is refunded.
Frequently Asked Questions
Side Note — Why It's Called a "Settlement"
The name "lump-sum gift settlement" (相続時精算課税, literally "taxation settled at the time of inheritance") captures exactly what this Japanese system does. Gift tax is paid upfront at a lighter rate than usual (a flat 20% on the amount over the exemptions), and then, when the donor passes away, the inheritance tax is recalculated on the "entire estate, including the gifted assets," with the gift tax already paid subtracted from that total. In other words, this system doesn't make gifts tax-free — it effectively shifts the timing of the tax burden from the moment of the gift to the moment of inheritance.
Before the reform that took effect in 2024, this Japanese system had no basic exemption at all, which meant even small gifts triggered a filing obligation — a widely criticized flaw. The 2024 tax reform introduced an annual basic exemption of 1.1 million yen, which now lets people make small, unreported annual gifts just as they would under calendar-year taxation, while still reserving the 25 million yen special exemption for occasions when a larger, lump-sum gift is needed.
One feature of this Japanese system worth noting is that it can never be undone once elected. Once you choose lump-sum gift settlement for gifts from a particular donor, every subsequent gift from that same donor is locked into this system permanently — you can never switch back to calendar-year taxation (the ordinary approach using the annual 1.1 million yen basic exemption) for gifts from that donor. This works in your favor for assets you expect to appreciate, but it carries a risk for assets that might lose value later: they'd still be added back to the estate at their higher assessed value from the time of the gift, working against you.