The Lower House on Monday approved a record ¥97.45 trillion budget for fiscal 2017 designed to finance ballooning social security costs and enhance Japan's defense capabilities.
The budget for the year starting April 1 also features money to invest in growth areas as the government tries to break the economy out of chronic deflation.
The Upper House will begin deliberating the budget Tuesday.
The budget is certain to be enacted by the end of the current fiscal year in March, given that the Constitution gives the Lower House more power over budgetary matters. Also, Prime Minister Shinzo Abe's Liberal Democratic Party and its ally, Komeito, control both Diet chambers.
It is the first time since 2014 that an annual budget has cleared the Lower House in February.
The government faces the difficult challenge of ensuring economic growth and restoring fiscal health, which is the worst among developed countries.
Excluding debt-servicing costs, a record ¥73.93 trillion is earmarked for policy spending in the general account.
Social security costs, including pensions and medical expenses, will increase to ¥32.47 trillion, accounting for roughly a third of total government spending.
Marking the fifth-straight yearly rise since Abe took office in 2012, defense spending will reach a record ¥5.13 trillion as Japan seeks to strengthen its response to China's maritime assertiveness and North Korea's missile development.
For fiscal 2017, tax revenue is estimated at ¥57.71 trillion, up 0.2 percent from the fiscal 2016 initial budget. Dependence on debt will be slightly reduced, with new bond issuance at ¥34.37 trillion, down ¥62.2 billion from a year ago.