Profits from stock investing and mutual funds are, in principle, taxed under "separate self-assessment taxation." The tax rate is largely fixed, so it does not rise significantly even as income grows. Crypto assets (also known as virtual currencies), on the other hand, are subject to "aggregate taxation." Under this system, crypto gains are combined with other income, such as employment income, to calculate the total tax owed — meaning the tax rate rises as income increases.

In other words, even though both are gains from investing, stocks and crypto assets are taxed under different calculation methods in Japan. Understanding this difference in tax treatment is important for correctly grasping how crypto trading works. This article breaks down the basic mechanics of aggregate and separate taxation, then explains how each relates to the tax treatment of crypto assets.

Note on the current tax framework (as of July 2026): Under Japan’s tax law today, gains from selling crypto assets (also known as virtual currencies) are treated as miscellaneous income and are subject to aggregate (comprehensive) taxation, not separate self-assessment taxation. On July 15, 2026, an amended Financial Instruments and Exchange Act (FIEA) passed the House of Councillors, which will move crypto assets under the FIEA as a financial product; the flat 20% separate self-assessment tax rate discussed below is expected to apply starting the fiscal year after the amendment takes effect (projected January 2028). Separately, losses from crypto trading can currently only be offset against other miscellaneous income — they cannot be offset against employment income or other income categories.

What is aggregate taxation?

Aggregate taxation is a method of calculating tax by combining multiple types of income. Employment income, business income, real estate income, and other income categories are added together, and income tax is calculated on that total. Gains from crypto assets fall under this aggregate taxation system.

Under aggregate taxation, a progressive tax rate applies: the higher the income, the higher the tax rate. Japan’s income tax rate is set in stages from 5% to 45%, and once residence tax (typically 10%) is included, the combined marginal rate can reach as high as 55%, depending on the taxpayer’s income level.

Taxable income

Tax rate

Deduction

¥1,000 to ¥1,949,000 (approx. $7–$13,000)

5%

¥0

¥1,950,000 to ¥3,299,000 (approx. $13,000–$22,000)

10%

¥97,500 (approx. $650)

¥3,300,000 to ¥6,949,000 (approx. $22,000–$46,300)

20%

¥427,500 (approx. $2,850)

¥6,950,000 to ¥8,999,000 (approx. $46,300–$60,000)

23%

¥636,000 (approx. $4,240)

¥9,000,000 to ¥17,999,000 (approx. $60,000–$120,000)

33%

¥1,536,000 (approx. $10,240)

¥18,000,000 to ¥39,999,000 (approx. $120,000–$266,700)

40%

¥2,796,000 (approx. $18,640)

¥40,000,000 and above (approx. $266,700 and above)

45%

¥4,796,000 (approx. $31,970)

USD figures are rough approximations calculated at ¥150 = US$1 and are provided for reference only.

Source: Income tax rates | National Tax Agency (in Japanese)

For example, suppose someone has ¥5 million (approx. $33,300) in employment income and earns a ¥1 million (approx. $6,700) profit from crypto trading. Under aggregate taxation, the two are combined into a total of ¥6 million (approx. $40,000) in income, and tax is calculated on that combined amount. As a result, the crypto gains end up subject to the same tax rate bracket as the employment income.

In this way, aggregate taxation is a system that combines multiple types of income for tax purposes, and it tends to place a heavier tax burden on those with higher overall income.

What is separate taxation?

Separate taxation is a method of calculating tax on certain types of income individually, without combining them with other income. Its defining feature is that the tax is calculated apart from employment income, business income, and the like. Typical examples include gains from selling stocks and dividend income. These are subject to what is known as "separate self-assessment taxation," under which the rate is fixed at 20.315% (15% income tax + 5% residence tax + a special reconstruction income tax), in principle.

Under separate taxation, the tax rate stays essentially the same regardless of how much income grows. For instance, whether an investor earns a ¥500,000 (approx. $3,300) profit from stock investing or a ¥5 million (approx. $33,300) profit, the tax is calculated using the same rate. This is what makes separate taxation distinct — it taxes certain income independently of other income, at a rate that stays flat.

The difference between aggregate and separate taxation

As the descriptions above make clear, the key difference between aggregate and separate taxation comes down to whether income is combined with other income for tax purposes.

Under aggregate taxation, multiple types of income — employment income, business income, and so on — are added together, and tax is calculated on the total. Because a progressive rate applies, the tax rate rises as income grows, meaning higher earners face higher rates.

Separate taxation, by contrast, calculates tax on specific income independently of other income. It is not combined with employment income or similar sources; instead, each is calculated on its own. Gains from stock investing fall under separate taxation, with a rate of roughly 20%, in principle.

Consider someone with ¥5 million (approx. $33,300) in employment income who also earns investment profits. Under aggregate taxation, the investment profit is combined with the salary, and a rate is applied based on the total income. Under separate taxation, on the other hand, only the investment profit is calculated on its own, so it is unaffected by the level of employment income.

As this shows, aggregate and separate taxation differ significantly in how tax is calculated. Under Japan’s current tax system, gains from crypto assets are treated as aggregate-taxed miscellaneous income. That means they are combined with other income, such as employment income, when calculating tax owed — a key point of contrast with stock investing, which is taxed separately. Grasping the difference between aggregate and separate taxation is therefore an essential first step to understanding how crypto assets are taxed.

Crypto assets could move to separate taxation

Under Japan’s current system, gains from crypto assets are classified as miscellaneous income and subject to aggregate taxation. On this point, the government and ruling party have signaled plans to reform how crypto assets are taxed. The fiscal 2026 tax reform outline states that, under certain conditions, crypto asset income would become subject to separate taxation.

Where a resident, etc. transfers crypto assets (limited to crypto assets registered in the financial instruments business operator registry; hereinafter "specified crypto assets") to a person conducting crypto asset trading business (tentative name), the resulting capital gains, etc. shall be taxed separately from other income at a rate of 20% (15% income tax, 5% individual residence tax).

Source: FY2026 Tax Reform Outline | Ministry of Finance (in Japanese)

If this system is introduced, tax would likely be calculated at a fixed rate, similar to how stock investing is currently taxed. The outline also points to the introduction of a three-year loss carryforward system, similar to the one used for stocks, which would allow losses to be carried forward and offset against future gains.

Where, among losses arising from the transfer of specified crypto assets to a person conducting crypto asset trading business, there remains an amount that cannot be fully deducted after being deducted from the amount of capital gains, etc. on specified crypto assets for the year in which the transfer occurred, that undeducted amount may, under certain conditions, be carried forward and deducted from the amount of capital gains, etc. on specified crypto assets in each of the three years following that year.

Source: FY2026 Tax Reform Outline | Ministry of Finance (in Japanese)

It’s worth noting that this proposed carryforward mechanism would be a departure from the current rules: today, losses on crypto assets can only be offset against other miscellaneous income earned in the same year and cannot be carried over to future years or offset against employment income or other income categories.

That said, the new tax treatment will not take effect immediately. It is premised on legal reforms that reposition crypto assets as "financial products," and the timing of its implementation is tied to when those legal changes take effect. As a result, depending on how the legal reform process unfolds, it has been suggested that the new tax rules might not apply until 2028 or later. Because the tax treatment of crypto assets could change significantly going forward, it’s important to keep following developments in this reform.

Summary

Aggregate and separate taxation are two distinct ways of calculating income tax. Aggregate taxation combines multiple types of income and calculates tax on the total, with a progressive rate that rises as income increases. Separate taxation, on the other hand, calculates tax on specific income independently of other income. Stock investing, for example, uses separate self-assessment taxation, with a rate of roughly 20%, in principle.

Currently in Japan, gains from crypto assets are treated as miscellaneous income and subject to aggregate taxation, meaning they are combined with employment income and other income when tax is calculated. That said, ongoing tax reform discussions are considering a shift to separate taxation for crypto asset income. Because the system may change in the future, it’s important to keep up with the latest information on how crypto assets are taxed.

This article is for informational purposes only and does not constitute financial or investment advice. Please consult a qualified professional before making investment decisions.