The government tax panel has decided to abolish income tax deductions for families with dependents, starting in fiscal 2011, ruling party lawmakers said.
The tax credit, which applies to families with children under the age of 16 and those with dependents aged between 23 and 69, permits annual deductions of ¥380,000 from national income tax and ¥330,000 from local income tax.
According to the decision reached Friday, the Tax Commission plans to abolish the national income tax deduction in fiscal 2011 and the local income tax deduction in fiscal 2012 in exchange for offering monthly allowances to families with children up to junior high school age, the lawmakers said.
The commission also decided to consider cutting special tax breaks for families with young people aged between 16 and 22, reversing an earlier decision to keep them in force.