Introduction
Japan's so-called "income walls" — social insurance thresholds that discourage part-time workers from earning more — are undergoing major reform in 2026. From April 2026, the method for testing the ¥1.3 million dependent threshold changes, and from October 2026, the ¥1.06 million wage requirement is abolished entirely.
The ¥1.3 Million Wall: New Assessment Method (April 2026)
Previous Rule
Dependent status under Japan's health insurance was assessed by estimating a worker's total annual income over the coming year, including overtime pay. This meant that a busy month with extra overtime could push a worker over the ¥1.3 million limit and knock them off their spouse's insurance.
New Rule: Contract-Based Assessment
From April 2026, annual income is assessed based on the wages stated in the employment contract (labor conditions notification), not actual earnings.
| Item | Old Rule (until March 2026) | New Rule (from April 2026) |
|---|---|---|
| Basis | Projected annual income | Contract-stated annual income |
| Overtime pay | Included in full | Generally excluded* |
| Commuting allowance | Included in full | Included in full (unchanged) |
| Bonuses | Included | Included if stated in contract |
*Fixed overtime allowances (included in the contract) are still counted.
Example
A worker's contract states base pay + allowances = ¥1.2 million/year. With overtime, actual earnings reach ¥1.38 million. Under the new rule, dependent status is maintained because the contract-based figure is under ¥1.3 million.
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Try for free →The ¥1.06 Million Wall: Abolished (October 2026)
Current Requirements
Part-time workers must enroll in employees' pension insurance if all five conditions are met:
- Weekly hours ≥ 20
- Monthly wage ≥ ¥88,000 (≈ ¥1.06M/year)
- Employment expected to exceed 2 months
- Not a student
- Employer has 51+ employees
What Changes
The monthly wage requirement (item 2) is abolished. Workers with weekly hours of 20 or more will enroll in employees' pension regardless of income.
| Date | Change |
|---|---|
| October 2026 | Wage requirement (¥88,000/month) abolished |
| October 2027 | Firm-size threshold (51+ employees) phase-out begins |
| October 2029 | Individual businesses (5+ employees) included (existing businesses exempt for the time being) |
| October 2035 | Firm-size threshold fully abolished |
Impact
According to Ministry of Health, Labour and Welfare materials, the coverage expansion will bring approximately 900,000 workers newly into social insurance (employees' pension and health insurance).
Premium Relief
For short-hour workers newly covered through the firm-size reform and similar changes whose standard monthly remuneration is ¥126,000 or less (under roughly ¥1.56 million/year), employers may choose, for three years, to shoulder a larger share of premiums than the standard 50/50 split, with the employer's additional burden fully supported by the system, cushioning the impact on take-home pay.
Practical Considerations
For Part-Time Workers
- After April 2026, your labor conditions notification determines dependent status — confirm its accuracy with your employer
- After October 2026, employees' pension enrollment is based on hours, not income — but enrollment increases your future pension benefits
- Run a take-home pay simulation to understand how the changes affect you
For Employers
- Ensure labor conditions notifications are accurate — they now directly affect dependent assessments
- Budget for increased social insurance costs from October 2026 onward
- Consider the premium relief measure for employees earning under ¥1.56 million
