What it does
In a normal account, gains and dividends are taxed at 20.315%. Inside a NISA, they are tax-free, and the account stays tax-free for as long as you hold the investments. The lifetime limit counts the purchase price of what you hold, and when you sell, the room is restored in the following year, so the account can be used again.
The new NISA limits (by purchase price)
| Frame | Per year | Lifetime |
|---|---|---|
| Tsumitate investment frame (regular saving into approved funds) | ¥1.2 million | Part of ¥18 million |
| Growth investment frame (shares, ETFs and funds) | ¥2.4 million | ¥12 million within the ¥18 million |
| Both frames together | ¥3.6 million | ¥18 million |
The two frames
The tsumitate frame is for regular saving into funds that meet government conditions for low costs and long-term investing. The growth frame is more flexible and can hold listed shares, ETFs and many funds, although some products, such as certain leveraged or monthly-payout funds, are excluded. You can use both in the same year.
At the maximum pace of ¥3.6 million a year, you would fill the ¥18 million lifetime limit in five years, but most people use much less than the limit.
Who can open one
You must be 18 or over and a resident of Japan on 1 January of the year you open the account. Foreign residents can open one, with their residence card and My Number. You can have only one NISA account, at one financial institution in each year, but you can switch institutions from year to year.
A children's version for under-18s has been planned for 2027 in tax reform proposals. It is not in force yet, so check the official details before relying on it.
What to know first
Losses inside a NISA cannot be set against gains in other accounts, so the tax relief works on gains and dividends only. Tax withheld by other countries on foreign dividends is generally not refunded by Japan.
NISA is for residents, and brokers have rules for people who move abroad. If you plan to leave Japan, ask your broker how the account is treated before you do.
Points to remember
- The tax benefit matters more the longer you hold and the more your investments grow, so it is a long-term tool.
- Compare funds on fees and what they hold, not just on past performance.
- You can start with a small monthly amount. There is no minimum beyond the broker's own rules.
- Remember that NISA removes tax, not risk. The value can still fall.
Words you will see
- 新NISA shin-NISA
- the new NISA
- つみたて投資枠 tsumitate tōshi-waku
- regular-saving frame
- 成長投資枠 seichō tōshi-waku
- growth frame
- 非課税保有限度額 hikazei hoyū gendogaku
- lifetime tax-free limit
- 非課税 hikazei
- tax-free
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Further reading
Books to read next
General books on investing and on the Japanese market. They are reading suggestions, not investment advice, and we do not endorse any investment.
- The Little Book of Common Sense Investing John C. Bogle The case for low-cost index funds, by the founder of Vanguard. See on Amazon ↗
- The Psychology of Money Morgan Housel Short stories on how behaviour, more than knowledge, shapes money decisions. See on Amazon ↗
- Kakeibo: The Japanese Art of Saving Money A guide to the Japanese household account book and mindful spending. See on Amazon ↗
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Source: Financial Services Agency, NISA guide. The 2027 changes for children are proposals at the time of writing.