The new NISA that began in 2024 greatly expanded the system that makes investment gains and dividends tax-free: the period you can hold assets tax-free is unlimited, the annual investment quota is up to ¥3.6 million, and over a lifetime you can use up to ¥18 million. When, how much, and on what should you use this "account with no tax"? This article organizes the basics of the new NISA and how to use it wisely.
The big picture of the new NISA (two quotas)
The new NISA has two investment quotas, and you can use both in the same year.
| Tsumitate (accumulation) investment quota | Growth investment quota | |
|---|---|---|
| Annual investment quota | ¥1.2 million | ¥2.4 million |
| Total (per year) | Up to ¥3.6 million | |
| Eligible products | Certain investment trusts suited to long-term, accumulation-based, diversified investing (products designated by the FSA) | Listed stocks, investment trusts, ETFs, REITs, and more (some are excluded) |
| How to buy | Accumulation (regular contributions) only | Either accumulation or lump-sum |
The period you can hold assets tax-free is unlimited. The system has also been made permanent. You can even fill the entire ¥18 million using only the Tsumitate investment quota[FSA].
The Growth investment quota covers a wide range of listed stocks and investment trusts, but the following are excluded: (1) liquidation/supervision-designated stocks (stocks at risk of delisting), (2) investment trusts with a trust period of under 20 years, (3) monthly-distribution-type investment trusts, and (4) high-leverage-type products (which use derivatives so their net asset value moves several times the index)[FSA]. The design excludes, in advance, products unsuited to long-term asset building.
Key features of the new NISA
- Investment gains and dividends are tax-free: the tax that normally runs about 20% (20.315%) is zero.
- The tax-free period is unlimited: there is no deadline like under the old system, so you can hold assets tax-free indefinitely.
- Selling restores your quota: when you sell a product, the quota equal to its acquisition cost (book value) is restored the following year and can be reused.
- You can combine the Tsumitate quota and the Growth quota: up to ¥3.6 million per year.
What is restored is not the price at which you sold, but the amount at which you bought (book value). Also, restoration is not immediate that year but happens the following year. The annual cap of ¥3.6 million also applies separately.
No tax return needed (but with caveats)
Because gains and dividends inside a NISA account are tax-free, no tax return is required. However, note the following points.
A loss in a NISA account cannot be offset against gains in a taxable account (such as a specified account), and it cannot be carried forward for the three-year loss carryforward deduction[National Tax Agency No.1535]. Keep in mind that if you sell when the price has fallen, the loss cannot be used for tax purposes (see Tax returns for stocks and NISA).
To make dividends on listed stocks tax-free within a NISA, you must set your dividend receipt method to the "proportional-to-shares distribution method" (receiving them into your securities account)[National Tax Agency No.1535]. With a method such as bank transfer, the dividends are taxed.
How to think about using it wisely
- First secure emergency funds: keep cash set aside for sudden expenses, then invest with surplus funds.
- Long-term, accumulation-based, diversified is the basic approach: the classic route is to steadily buy low-cost investment trusts every month in the Tsumitate investment quota.
- You don't need to rush to fill the quota: there is no need to force yourself to use up all ¥18 million; go at a comfortable pace.
- For retirement funds, consider dividing roles with iDeCo: NISA offers freedom to withdraw, while iDeCo offers an income deduction (iDeCo or NISA: which one).
FAQ
What are the annual and lifetime limits of the new NISA?
Per year, the Tsumitate investment quota of ¥1.2 million plus the Growth investment quota of ¥2.4 million = up to ¥3.6 million. The lifetime tax-free limit is ¥18 million in total (of which the Growth investment quota is up to ¥12 million).
Does the quota come back when I sell?
Yes. The quota equal to the acquisition cost (book value) of the sold product is restored the following year and can be reused. However, the annual cap of ¥3.6 million applies separately.
Do I need to file a tax return for NISA?
Because gains and dividends inside a NISA account are tax-free, no tax return is required. However, you cannot offset profits and losses or carry forward losses, and to make dividends tax-free you must choose the proportional-to-shares distribution method.
Can I use the full ¥18 million with only the Tsumitate investment quota?
Yes. It is possible to fill the ¥18 million lifetime limit using only the Tsumitate investment quota. The Growth investment quota has an inner cap of up to ¥12 million.
Summary
Reference links (sources)
This article is based on the following materials from public bodies (neutral, primary sources). Because the details of the system change, please check the latest content before using it.
- Financial Services Agency — NISA special website (in Japanese)
- National Tax Agency — No.1535 NISA (small-amount investment tax exemption system) (in Japanese)
* This article is general information, not investment solicitation or tax advice. Make investment decisions at your own responsibility, and check the latest rules with the FSA and others.