In February 2025, a group of attorneys filed a lawsuit against the Japanese government, arguing that childcare fees should be recognized as necessary expenses for income tax purposes. Their claim challenges the long-standing tax authority stance that categorizes childcare fees as “personal household expenses,” which cannot be deducted.
The plaintiffs argue that childcare fees are essential for parents to work and therefore should be treated as costs directly related to earning income.
In response, the government asserts that childcare facilities exist primarily to provide care and education for children, and that supporting parents’ employment is merely a secondary effect. For that reason, childcare fees, it argues, cannot be considered business-related expenses.
However, this government position contains a serious contradiction.
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■ If childcare facilities exist “for children,” why is parental employment required?
Although the government insists in court that childcare centers are educational and welfare institutions for children, the actual system operates as follows:
Parents must be employed to enroll their children in most cases.
Enrollment requires proving a “need for childcare” based on parental employment, illness, or other circumstances.
Enrollment based solely on a child’s developmental or educational needs is generally not accepted.
If the primary purpose is truly the “care and education of children,”
then it makes little sense for access to childcare to depend on the parent’s employment status.
In reality, childcare centers already function as essential infrastructure for working parents.
This mismatch between the government’s claim and how the system is actually run is at the core of the controversy.
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■ Why does this contradiction exist?
The root of the issue lies in the historical dual structure of Japan’s childcare system.
● Postwar era–early 2000s
Childcare centers were originally established as welfare institutions for families unable to care for children at home. Enrollment depended on family circumstances such as employment, illness, or caregiving burdens.
● Present
Today, the overwhelming majority of childcare use—around 95%—is due to parental employment.
Societal changes have effectively transformed childcare centers into employment-support infrastructure.
However, tax rules and official terminology have not kept up.
The older framework—“childcare is for the welfare of the child”—still influences tax interpretation.
This gap between system design and system reality leads to the inconsistency seen in the current court case.
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■ What happens if the court rules in favor of the plaintiffs?
A ruling recognizing childcare fees as necessary expenses would have significant social and policy implications.
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① Working families would see a substantial reduction in financial burden
Childcare fees can easily reach hundreds of thousands of yen per year.
If they become tax-deductible, many families would see a notable increase in disposable income.
Example:
Annual childcare fees: ¥600,000
Total effective tax rate (income + residence tax): 30%
→ Tax reduction of approximately ¥180,000
Families with multiple children would benefit even more.
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② The judiciary would effectively acknowledge childcare as “employment support”
Such a ruling would carry enormous weight.
It would formally reclassify childcare as being tied to parental employment, prompting a broader reevaluation of:
Enrollment criteria
The extent and structure of childcare fee subsidies
The treatment of childcare within the education system
This could trigger systemic reform across the childcare landscape.
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③ The long-standing tax concept of “personal household expenses” would be challenged
If childcare fees qualify as necessary expenses, similar questions will naturally arise regarding:
Babysitting services
Sick-child childcare
Transportation costs for distant childcare facilities
Portions of housework support services
The boundary between personal life and work-related expenses would need to be redefined, prompting a significant revision of existing tax law.
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④ Women’s career continuity would become more achievable
In Japan, many women are forced to pause or abandon their careers due to childcare costs and limited support.
Allowing childcare fees to be deducted would mean:
Continuing to work would no longer be a financial disadvantage
Returning to full-time employment would be easier
Higher labor force participation among women
Clear benefits for employers and the broader economy
This could help alleviate the career penalties associated with raising children.
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⑤ It would have meaningful implications for addressing declining birth rates
Japan currently faces a situation where “the more children you have, the more financially difficult life becomes.”
Alleviating childcare costs through tax reform could ease this burden and contribute to broader population policy efforts.
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■ Conclusion: A lawsuit that calls into question the future of Japan’s childcare system
This lawsuit is not merely about tax deductions. It raises fundamental questions:
What is the true purpose of childcare?
Who bears responsibility for child-rearing in modern society?
How should the rights of parents and children be balanced?
Is the tax system aligned with current social realities?
A victory for the plaintiffs would force Japan to reconsider the foundations of its childcare, taxation, and employment systems.
The outcome may shape the future of family policy and gender equality for years to come.
This is a case that deserves careful public attention.
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References
Bengoshi.jp News: “Should childcare fees be considered necessary expenses? Government and plaintiffs sharply divided…”
Ministry of Health, Labour and Welfare: Childcare Needs Certification Guidelines
Ministry of Health, Labour and Welfare: Childcare Utilization Surveys
Academic studies on the historical development of Japanese childcare policy
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【Column】Should Childcare Fees Be Considered “Necessary Expenses” Under Tax Law?
Japan Parenting News