What is NISA?
NISA is Japan's tax-advantaged investment account, modeled after the UK's ISA system. Under the new NISA system launched in 2024, investors can contribute up to 3.6 million yen annually with a lifetime limit of 18 million yen. All capital gains and dividends within the account are permanently tax-free, compared to the standard 20.315% tax rate.
NISA Account Structure
The new NISA has two tiers: the Tsumitate (accumulation) tier allows up to 1.2 million yen annually for approved index funds and balanced funds, while the Growth tier allows up to 2.4 million yen annually for a broader range of stocks and funds. Both tiers can be used simultaneously, and the tax exemption has no time limit.
Key Considerations
NISA should be the first account most Japanese investors fill because the tax savings are substantial. On a 10 million yen gain, you save over 2 million yen in taxes. However, losses in NISA cannot be used to offset gains in taxable accounts, so it is best suited for long-term, diversified investments rather than speculative trades.