Japan Kodomo NISA Calculator: Under-18 Tsumitate Quota, ¥600,000 a Year and ¥6 Million Limit (From 2027)

It removes the lower age limit of the tsumitate investment quota (つみたて投資枠) so that children aged 0 to 17 can use it. It was decided in the FY2026 (Reiwa 8) tax reform (Act No. 12 of Reiwa 8) and can be used from January 1, 2027. The annual investment limit is ¥600,000 and the lifetime tax-free holding limit is ¥6 million; there is no growth quota, only the tsumitate quota.

The purpose the Ministry of Finance and the FSA give is to let families prepare for costs such as university through long-term, diversified installment investing.

Under the statute (Act on Special Measures Concerning Taxation, Article 37-14), a Kodomo NISA account section can be set up for a resident who has opened a NISA account, in the years in which they are under 18 on January 1 and in the year of birth. According to the Ministry of Finance, the account is in the child's name and a parent or other person with parental authority handles procedures with the financial institution as the account manager. Because the scheme starts in 2027, a child born in 2026 is 0 on January 1, 2027.

In the same way as the adult new NISA. The annual limit is counted on what you buy during the calendar year (up to ¥600,000). The lifetime limit is counted on book value: the statute allows a purchase only if this year's purchases plus the book value of the Kodomo NISA account on December 31 of the previous year stay within ¥6 million. The Order for Enforcement (Article 25-13, paragraph 24) sets the book value as the acquisition cost by the average-cost method, per product. However much your investments grow, gains do not use any of the limit.

For example, ¥50,000 a month is exactly the annual limit and fills the lifetime limit in 10 years. ¥30,000 a month is a plan of ¥6,480,000 over 18 years, but the limit is ¥6 million, so purchases after August 2043 cannot be made.

With restrictions. Under the statute, until December 31 of the year before the "reference year" (the year the child is 18 on March 31), holdings cannot be moved out of the Kodomo NISA account or returned to the holder. The exceptions: before the year the child is 12 on March 31, only unavoidable events such as disasters or illness; from that year on, you can also request a transfer or return by submitting a document to the financial institution stating, among other things, that the money pays for education or living costs. The Ministry of Finance describes the condition as the money being used for the child, with a document showing the child agrees, submitted by the parent or guardian.

Also, the proceeds of sales and any dividends received must be deposited immediately into a restricted account (a "specific taxable minor account") until December 31 of the year before the reference year (statute). The restrictions end from the reference year, that is, the year the child is 18 on March 31. For a child who turns 18 early in the year (already 18 by March 31), that is the year they turn 18; for the others it is the year they are 18 on January 1. The calculator's withdrawal option starts from the year the child is 18 or older on January 1, which is never earlier than the reference year, and does not include withdrawals between age 12 and 17.

According to the FSA and Ministry of Finance materials, at 18 the Kodomo NISA account moves automatically to the adult tsumitate quota. From then on you can continue in the adult quotas (annual limits of ¥1.2 million and ¥2.4 million, ¥18 million in total).

However, I could not find an official document that states whether the book value built up in Kodomo NISA counts toward the adult ¥18 million limit. The wording of the statute (the Kodomo NISA account section is a kind of tsumitate account section, and the previous-year-end book value used for the adult limit is that of the tsumitate account section) reads as if it does, but this is unconfirmed. The calculator does not include new purchases in the adult quota after the move, so the figures it shows are not affected. Check with your financial institution before you continue.

You can buy the same investment trusts as in the adult tsumitate quota (those suited to long-term, diversified installment investing), by a regular, continuing installment plan (Ministry of Finance). Junior NISA was a scheme up to 2023 and no new purchases can be made in it (FSA). Kodomo NISA is a new scheme that lets the tsumitate quota be used from age 0, and it differs from Junior NISA in its annual limit (¥600,000), lifetime limit (¥6 million), the conditions for withdrawals from age 12 and more.

Money that a parent or someone else puts into a child's account is a gift. Gift tax under calendar year taxation is calculated on the total received in a year after a ¥1.1 million basic deduction (National Tax Agency, Tax Answer No.4408), so contributions up to the ¥600,000 annual limit normally fall within it. Add up any other gifts in the same year. You can calculate gift tax with the gift tax calculator.

Gains on listed stocks and investment trusts are taxed at 15% income tax and 5% resident tax, plus a special reconstruction income tax of 2.1% of the income tax (National Tax Agency, Tax Answer No.1463). Together that is 20.315% (15% + 0.315% + 5%), the same breakdown the FSA gives. The calculator's "in a taxable account" figure is the tax on the gain if everything were sold at that point (rounded down to a whole yen); when you withdraw, the tax on the gains you withdrew is shown separately. It ignores loss offsetting and carry-forward.

Nobody can know future returns, so this calculator cannot tell you which figure to enter. The return you enter is treated as a constant annual rate after fees such as trust fees. Real returns rise and fall from year to year and can fall below your principal. Try a range: use the table showing a 2-point difference below the results, and try 0% (no growth) as well.

Kodomo NISA is the child's own account. Your own new NISA can be forecast separately with the new NISA calculator (tsumitate and growth quotas, with withdrawals). Contributing to the child's account does not use any of your own limits.

It uses the same engine as the adult new NISA calculator with the limits replaced by ¥600,000 a year, ¥6 million in total and no growth quota. It buys at the start of each month and adds that month's growth at the end of the month (the annual return is converted to a monthly compounded rate). Years are calendar years, starting in January 2027, and the child's age is counted on January 1 of each year. It contributes in the years the child is 17 or younger on January 1 and stops in the year the child is already 18 on January 1.

Withdrawals (for tuition, for example) start in January of a year in which the child is 18 or older on January 1, in equal monthly amounts. The account is treated as one product, and the book value sold is calculated at the average cost (book value × amount sold ÷ market value). Dividends and new purchases in the adult account after the move are not included.