The "lump-sum gift for education expenses," which let grandparents give a grandchild up to ¥15 million tax-free for education costs in one go, stopped accepting new applications on March 31, 2026 (Reiwa 8) under the FY2026 tax reform. "So there's no tax-free way to help with a grandchild's tuition anymore?" No — there is. In fact, "education expenses paid as and when needed" were never subject to gift tax in the first place. This article organizes what ended, how existing contracts are treated, and three alternative measures you can still use today.
① The lump-sum gift for education expenses (¥15 million tax-free) stopped accepting new applications on March 31, 2026. Amounts contracted before then can still be used tax-free[NTA No.4510].
② Alternative 1: Help with education and living expenses "as and when needed" was never taxable (between persons with a support obligation; e.g., paying an entrance fee directly)[NTA No.4405].
③ Alternative 2: the ¥1.1 million basic deduction for annual (calendar-year) gifts / the ¥1.1 million annual deduction under the settlement-at-inheritance taxation system.
④ Alternative 3: The lump-sum gift for marriage and child-rearing funds (¥10 million) continues until March 31, 2027 (Reiwa 9).
⑤ For most families, the end of the lump-sum gift does little real harm. That is because "paying as and when needed" can keep things fully tax-free.
What ended? (A recap of the system)
The lump-sum gift for education expenses was a system in which a lineal ascendant such as a grandparent opened an education-fund account at a financial institution and could gift, in one go, up to ¥15 million per recipient tax-free (up to ¥5 million for payments to entities other than schools)[NTA No.4510]. It began in 2013 and was extended repeatedly, but the FY2026 tax reform did not extend it, and it stopped accepting new applications with contracts made on March 31, 2026.
- Amounts already contracted: can still be withdrawn tax-free (procedures such as submitting receipts remain the same as before).
- The existing cautions also continue: gift tax applies to any balance remaining when the recipient turns 30, and inheritance tax on the balance if the giver dies during the contract (in certain cases) — a design where "not using it up works against you."
Alternative 1: Help "as and when needed" is still tax-free (the most important)
It is surprisingly little known, but help with education and living expenses from a person with a support obligation (a parent or grandparent) is not subject to gift tax, regardless of the amount, as long as it is "to be applied directly, as and when needed"[NTA No.4405].
- OK example: grandparents wire an entrance fee or tuition directly to the school / help with monthly rent for lodging / buy a school backpack or teaching materials as and when needed
- NG example: handing over several million yen to an account in one go "for future tuition" (not as-and-when-needed, so an ordinary gift) → the portion diverted into savings or investments is also taxable
- The trick is to keep transfer records and receipts so you can show it was "as needed, at actual cost."
In other words, as long as you pay a grandchild's tuition as and when needed, the end of the lump-sum gift does almost no real harm. The lump-sum gift's true use case was when "inheritance is near and you want to move a lump of assets ahead of time."
Alternative 2: The ¥1.1 million calendar-year gift / settlement-at-inheritance taxation
- Calendar-year gift: within the ¥1.1 million annual basic deduction, no filing is needed and it is tax-free (How to use the gift-tax exemption; it also explains how to avoid being deemed a recurring gift). Watch out for the add-back of gifts made within 7 years before the start of inheritance.
- Settlement-at-inheritance taxation: from 2024 a new ¥1.1 million annual basic deduction was created, and at ¥1.1 million or less no filing is needed and there is no add-back. It is a strong option for moving assets systematically from an elderly giver.
- As-and-when-needed help with education expenses (tax-free) and the ¥1.1 million gift can be used together.
Alternative 3: The lump-sum gift for marriage and child-rearing funds (until March 2027)
Among the similar systems, the lump-sum gift for marriage and child-rearing funds (up to ¥10 million per recipient, of which up to ¥3 million for marriage costs) is available until March 31, 2027 (Reiwa 9)[NTA No.4511]. It targets children and grandchildren aged 18 to 49 and can be used for wedding ceremonies, fertility treatment, childbirth, childcare fees, and the like. However, this too involves taxation on any unused portion and procedural effort, so as a rule you should first consider whether "tax-free as-and-when-needed help" is enough.
FAQ
What happens to an education-fund account I have already contracted?
Amounts contracted by March 31, 2026 can still be withdrawn tax-free for education expenses after the system ends, just as before. The gift tax on any balance at age 30, the treatment of the balance if the giver dies, and other existing rules also stay the same. Make a plan to use it up.
Once the system ends, will I be unable to help with a grandchild's tuition tax-free?
No. Help with education expenses from a person with a support obligation is, and always was, tax-free regardless of amount, as long as it is "to be applied directly, as and when needed." If you wire an entrance fee or tuition directly to the school, you can still help tax-free without any problem after the system ends.
What if I want to hand over a lump sum ahead of time?
Options include using the calendar-year gift (¥1.1 million a year), settlement-at-inheritance taxation (a ¥1.1 million annual basic deduction from 2024), and the lump-sum gift for marriage and child-rearing funds (¥10 million, until March 2027). Because it affects your overall inheritance plan, we recommend consulting a tax accountant when the amount is large.
Is paying for cram-school or lesson fees also tax-free?
Within the range recognized as ordinarily necessary for education, and as something applied directly as and when needed, it is treated as tax-free. Paying the fees as and when they arise is normally no problem. Avoid handing over a lump sum whose use becomes unrestricted.
Sources
- Lump-sum gift for education expenses (¥15 million; application deadline March 31, Reiwa 8): NTA No.4510 (in Japanese)
- Living and education expenses from a person with a support obligation (tax-free if as-and-when-needed and direct): NTA No.4405 Cases where gift tax does not apply (in Japanese)
- Lump-sum gift for marriage and child-rearing funds (¥10 million; until March 31, Reiwa 9): NTA No.4511 (in Japanese)
* The ending and extension of systems change with tax reform. This article is general information; please confirm the design of specific gifts and inheritances with a tax accountant.