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 donor) | 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 donor and per recipient, 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
Tips
- 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.
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.