Are investment gains from a NISA account truly completely tax-exempt?

NISAJapanInvestingTax ExemptionWealth Building
Views: 1Created At: 9/8/2025Updated At: 9/17/2025
Cory Kim
Cory Kim
Experienced investment banker with 15+ years.

Are Investment Gains in a NISA Account Completely Tax-Exempt?

In short: Yes, within the stipulated limits of a NISA account, all investment gains are completely tax-exempt.

This might sound too good to be true, but it is indeed the core and most attractive feature of the NISA (Nippon Individual Savings Account, or Small-Amount Investment Tax Exemption System) scheme. However, understanding the "completely tax-exempt" aspect is key to grasping its two "limiting conditions."

You can imagine a NISA account as a "tax-free magic wallet" gifted to you by the government.

1. The amount of money you can put into this wallet each year is limited.

This is the "Annual Investment Limit" (年間投資枠).

  • You cannot stuff an unlimited amount of money into this tax-free wallet. Each year, you only have a certain allowance for investment.
  • Taking the new NISA starting in 2024 as an example, this limit is a maximum of 3.6 million JPY per year.
  • If you invest 3.6 million JPY this year, you cannot put any more money into this "tax-free wallet" for the current year. If you wish to invest beyond this amount, you would have to do so in a regular taxable account, where any gains would be subject to tax.

2. The total assets this wallet can help you make tax-exempt over your lifetime are limited.

This is the "Lifetime Tax-Exemption Limit" (生涯非課税限度額).

  • While this magic wallet is useful, there's an upper limit to the total assets it can manage for you (calculated based on your principal investment).
  • Currently, this upper limit is 18 million JPY.
  • You can gradually use up this allowance over several years, for example, by investing 3 million JPY annually for 6 years; or you can invest slowly over your entire lifetime.
  • Once your cumulative principal investment reaches 18 million JPY, you can no longer put new principal into this wallet.

Conclusion

So, the answer to the question is:

As long as your investment activities strictly adhere to the framework of these two "limits":

  • The principal invested each year does not exceed the annual limit.
  • The cumulative total principal invested does not exceed the lifetime limit.

Then, all gains generated within your NISA account, whether from stock or fund trading (capital gains) or dividends (配当金), are 100% tax-exempt. If you earn 1 million JPY, you receive the full 1 million JPY, without paying a single yen in tax (normally around 20.315%).

For most ordinary people, the 18 million JPY lifetime limit is already very generous. Making good use of this system can significantly help ordinary individuals in Japan accumulate long-term wealth.

Created At: 09-08 12:16:00Updated At: 09-08 12:24:47