The New NISA Program: An Easy Walkthrough

NISA (Nippon Individual Savings Account) is a tax-exempt savings account program initiated by the Japanese government in 2014 to help Japanese citizens and residents save for retirement. 

Dividends from stocks are normally taxed at 20.315 percent. If you buy stocks through a NISA account, those dividends stay tax free up to a set limit.

These tax-exempt limits and the way NISA changed from January 2024, and largely, this is good news for NISA holders. 

I’ve been using NISA for the past 4 years, and this change to the program has my inner accountant quite delighted and ready to max out my new accounts. 

If you’ve been wondering what’s in the new NISA program and how to make use of it, this article is a decent place to start. 

How the old NISA worked

In the old NISA program, two kinds of NISA accounts were available: 

The first is the General NISA, which allows investment up to 1.2 million yen annually with a tax-free window of 5 years. 

The second is the Tsumitate NISA, which permits investment up to 400,000 yen per year but offers a tax-free period of 20 years. 

You can't sign up for both at the same time, so you must choose one of them. Tsumitate NISA works through regular monthly contributions to your investment savings account.

Most investors contribute automatically every month. Your financial institution may also let you add up to two bonus contributions per year, on top of your regular monthly amount.

The new NISA guidelines

From January 2024, Tsumitate NISA became the Tsumitate Quota. The annual investment contribution limits rose to 1.2 million yen from 400,000 yen, per Japan's Financial Services Agency.

The General NISA will be renamed to Growth Quota, and the annual contribution limit will be doubled from 1.2 million yen to 2.4 million yen. 

Previously, you had to choose one account type or the other. With the new NISA, you can use both at the same time. 

Japan's Financial Services Agency sets the total lifetime contribution limit at 18 million yen across both accounts.

However, you are also now allowed to sell stocks from your NISA account and then repurchase so that you once again meet the limit of 18 million yen. 

For instance, say you’ve maxed out your 18 million yen lifetime limit in your NISA account. You have an upcoming home renovation project, and you’ve decided to withdraw 5 million yen, reducing your NISA total to 13 million yen. In that case, you can top your NISA accounts back up until you reach the 18 million yen lifetime limit once again. 

Additionally, the tax exemption period has changed from 5 years for the General Nisa and 20 years for the Tsumitate Nisa to being forever tax exempt in both the Tsumitate Quota and Growth Quota. 

In other words, there is no limit to the tax exemption period for both quotas of the new NISA.

What are the main points of difference between the new NISA and the old NISA?

What can we buy in the new NISA program?

Under the new Tsumitate Quota, the stocks and assets you can buy are pretty much the same as the old Tsumitate NISA. 

The government selects the options and the eligible investment trusts are those that invest in balanced-type (asset-mixed) stocks.  

The options are predominantly index funds. Japan's Financial Services Agency updates this eligible list regularly, so exact fund counts change throughout the year.

Check the FSA's live Tsumitate Quota product list for the current number of index funds, other investment trusts, and ETFs. This official source stays current as products are added or removed.

Under the new Growth Quota, individuals can purchase similar products as the traditional general NISA, including listed stocks (domestic and foreign, ETFs and REITs) and public offering investment trusts. However, certain products previously purchasable under the general NISA will no longer be available under the growth investment quota. Specifically, this pertains to stocks of companies already scheduled for delisting or those with a potential risk of delisting.

Also, for investment trusts, the following additional exclusion criteria will apply:

• Trust periods of less than 20 years.

• Those utilizing high-leverage derivatives (financial derivatives) for purposes other than specific objectives.

• Monthly distribution types.

Additional conditions are in place here compared to eligible products in the old general NISA.

Furthermore, investment trusts tied to trending themes like Digital Transformation (DX), Artificial Intelligence (AI), Blockchain, and other engaging topics tend to have shorter trust durations, making many ineligible. NISA aims to support individual asset formation. Consequently, with the move towards permanence, the growth investment framework will also enjoy tax incentives but be limited to products more conducive to asset formation.

How much can we invest per month/per year for Tsumitate Quota?

NISA users can invest a total of 1.2 million yen per year in the new Tsumitate Quota account and a suggested amount of 100,000 yen per month.

Under the new NISA program, there is a set upper limit on the amount you can invest within one year. Most people invest monthly, but there's no fixed minimum contribution amount.

You can also add up to two bonus contribution months per year. This lets you use more of your annual limit without changing your regular monthly amount.

If you so desire, you can use your Tsumitate Quota to completely max out your 18 million yen NISA allotment, which you can’t do with the Growth Quota account. 

How much can we invest per month/per year for Growth Quota?

NISA users can invest a total of 2.4 million yen annually, 200,000 yen per month. 

The maximum you can invest in a Growth Quota account is up to 12 million yen (anything that exceeds 12 million yen will not fall under the tax benefits of this program).

How to prepare for the new NISA program? 

For those who currently don’t have a NISA account, choose a financial institution that provides NISA accounts, and start the application process. 

For those who already have either a General NISA or a Tsumitate NISA account, good news—your financial institution will automatically create your new NISA account for you, starting January 1, 2024. So sit tight, and perhaps free up some of your cash to max out your yearly allowable limit (3.6 million yen per year). 

Where to open your NISA account

Your choice of financial institution affects what you can buy. Compare your options before you commit, since you can only hold one NISA account at a time.

You can change your financial institution once a year if your needs change. Online securities companies generally offer the broadest range of mutual funds and the lowest fees.

Your financial institution will send paperwork throughout this process. Notices about your annual contribution limit, tax exemption period, or account statements often arrive in Japanese.

MailMate can scan and translate these documents for you. You'll never miss an update about your investment trusts or your annual investment limit, even if you're away from Japan.

NISA vs. iDeCo: which should you start first?

NISA is not Japan's only individual savings account with tax benefits. iDeCo is a separate retirement account, and it works differently.

NISA suits savers who want flexible, long term investment options for general asset building. You can withdraw your money at any time.

iDeCo locks your money away until age 60. In exchange, your monthly contributions reduce your taxable income today, not just your future capital gains.

Many Japanese households use both accounts together. NISA covers flexible growth, and iDeCo covers dedicated retirement savings.

If an individual opens a NISA account and then moves abroad, can they still invest in their NISA account?

NISA requires Japanese residency. If you move abroad permanently, your financial institution moves your NISA assets into a regular taxable account.

Rules around temporary moves abroad vary by financial institution. Some brokerages now allow you to keep your account open under specific conditions, so check your broker's current policy before you leave.

Contact your financial institution before any move abroad. Ask about their notice requirements, any freeze options they offer, and what happens to your account if you return to Japan.

This part of NISA policy changes as individual brokers update their rules. Confirm the latest requirements directly with your bank or securities company, not from general guides alone, including this one.

Risks to know before you invest

NISA accounts offer real tax benefits. But the new NISA program still carries investment risk, and you should understand these drawbacks before you invest.

• Your principal is not guaranteed. The stock market can fall after you invest. An unrealized loss inside your NISA account is still your loss, even though any gains would have been tax free.

• You cannot offset NISA losses against a taxable account. Investors normally net gains and losses across accounts to reduce their tax bill. NISA accounts don't allow this, since all NISA activity sits outside your regular taxable income.

• Foreign tax credits do not apply inside NISA. If you hold foreign stocks or ETFs, your home country may still tax those dividends and capital gains. Japan's tax exemption doesn't cancel out foreign tax obligations.

• Moving abroad ends your NISA eligibility. This is covered above, but it belongs here too: leaving Japan moves your money invested in NISA into a regular taxable account.

If you still hold assets in a current general NISA account from before 2024, these same principal and market-value risks apply until that account's tax-free period ends.

This article is for general information only. It does not replace personalized financial or tax advice. Talk to a licensed financial institution or tax professional about your own situation before you invest.

Frequently asked questions

When does the new NISA program start?

The new NISA program starts on January 1, 2024.

What does the new NISA program contain?

The new NISA program contains major expansions to the current NISA program. For example, the investment limits per account (General NISA and Tsumitate NISA) are significantly increased and tax-free investment duration restrictions are lifted completely, with no limit imposed on the tax-free period.

Who can use the new NISA program?

Anyone residing in Japan who is 18 years and older can use the new NISA program.

How long do I need to live in Japan to open a NISA account?

Japan bases tax residency on your actual living situation, not a fixed calendar date. You generally become a tax resident once you establish your home in Japan.

Most brokers require proof of residency, such as a residence card and registered address, before opening a NISA account. Confirm your specific eligible start date with your financial institution, since exact requirements can vary.

What happens to the stocks in the old General NISA account?

The old general NISA assets cannot be rolled over to the new NISA. Your old general NISA assets can be transferred to a taxable account at market value once the 5-year tax-free period is up. Or, as in the past, you can still sell your assets as needed.

What happens to the stocks in the old Tsumitate Nisa account?

Assets in your old Tsumitate NISA account cannot be rolled over to the new NISA. The assets in your account will continue to be tax-exempt until the 20-year period has passed. After which you can transfer them to a taxable account or sell them off.

What happens to junior NISA accounts?

The Japanese government discontinued new junior NISA accounts in 2023. A junior NISA account cannot transfer into the new NISA program.

Assets in an existing junior NISA account move to a continued management account. This happens once the tax free period ends, after five years.

You can hold these assets tax free until the child turns 18. Selling early rarely makes sense if time remains in the tax exemption period.

Update: a new Child NISA is coming in 2027. Japan's government passed a 2026 tax reform bill on March 31, 2026. This law restarts tax free investing for children, through a new Tsumitate-only account.

The annual investment limit for Child NISA is ¥600,000. The lifetime contribution limit is ¥6,000,000, held in the child's own account.

Withdrawals are allowed once the child turns 12. The program is expected to start January 1, 2027, with 2026 as a preparation year for financial institutions.

Full procedural details are still being finalized before launch. Confirm the latest rules with your financial institution as the start date approaches.

Resources

• New NISA as a versatile asset builder, Fidelity International

• 大改正でどう変わる？　新NISA　徹底活用術

• Financial Services Agency