Tsumitate vs Growth NISA Explained (2026)

If you’ve started researching NISA, Japan’s tax-free investment account, you’ve probably run into two confusing terms: the “Tsumitate Investment Allowance” and the “Growth Investment Allowance.” This guide skips the basics of NISA eligibility (foreign residents are generally eligible under the same rules as everyone else) and focuses on what actually matters once you’re in: how these two allowances differ, and how to use both together strategically — including how they compare to the retirement accounts you may already know from the US, the Roth IRA and 401(k).

The Big Change: You Can Now Use Both at Once

Under the old NISA system (through 2023), you had to choose either the Tsumitate NISA or the General NISA for the entire year — not both. Since the 2024 overhaul, these have been renamed the Tsumitate Investment Allowance and the Growth Investment Allowance, and critically, you can now fund both in the same year. This is the single biggest change that makes the “combine both allowances” strategy in this guide possible.

What Actually Differs Between the Two

Feature	Tsumitate Allowance	Growth Allowance
Annual limit	JPY 1.2 million	JPY 2.4 million
Lifetime limit	No separate sub-cap (within the overall JPY 18M)	Capped at JPY 12 million
Eligible investments	A curated list of low-cost, diversified index funds approved by Japan’s FSA	Individual listed stocks, ETFs, REITs, and mutual funds (some high-risk products excluded)
Buying style	Recurring purchases only, on a regular schedule set by contract with your broker	Both recurring purchases and one-time lump-sum buys
Tax-free holding period	Unlimited	Unlimited

How NISA Compares to a Roth IRA or 401(k)

If you’re used to US retirement accounts, a few differences stand out. For 2026, the IRS set the 401(k) employee contribution limit at $24,500 (plus an $8,000 catch-up for those 50+, or $11,250 at ages 60–63 — IRS), and the IRA/Roth IRA limit at $7,500. Roth IRA eligibility also phases out for single filers earning between $153,000 and $168,000. NISA has no income limit at all, and unlike a Roth IRA or 401(k), it isn’t a retirement-specific account — there’s no early-withdrawal penalty and no age restriction on taking money out. In exchange, NISA’s combined annual allowance (JPY 3.6M, roughly $24,000 at typical exchange rates) sits in a similar ballpark to maxing out a 401(k) alone, and its JPY 18M lifetime cap is a hard ceiling with no equivalent in the US system, where 401(k)/IRA limits simply reset every year with no lifetime maximum.

Splitting JPY 3.6 Million a Year Between the Two

Combine the Tsumitate Allowance (JPY 1.2M) and Growth Allowance (JPY 2.4M) and you get up to JPY 3.6 million a year in tax-free investment room. The two allowances work completely independently — not fully using one doesn’t block you from using the other. But keep in mind: unused annual allowance does not roll over. Whatever you don’t invest by December 31st is gone for good, not carried into the next year.

The Catch in the JPY 18M Lifetime Cap: Growth Tops Out at JPY 12M

The combined lifetime tax-free holding limit is JPY 18 million, but there’s an important catch: no more than JPY 12 million of that total may come from the Growth Allowance. In other words, you can never reach the full JPY 18M using the Growth Allowance alone — at least JPY 6 million must come through the Tsumitate Allowance. The Tsumitate Allowance, by contrast, has no separate sub-cap, so in theory you could fill the entire JPY 18M lifetime limit using only the Tsumitate Allowance.

If your plan is to lean heavily on individual stock picking through the Growth Allowance, budget for hitting that JPY 12M ceiling and plan to route the rest through Tsumitate-eligible index funds.

Selling Frees Up Allowance — But Not Immediately

Another feature of the current NISA system: when you sell a holding, your lifetime allowance is restored by an amount equal to the original purchase price, not the sale price. Sell shares you bought for JPY 3M for JPY 5M, and only JPY 3M of allowance comes back — not JPY 5M.

The timing matters too: that freed-up allowance only becomes usable starting the following year, not immediately. Sell in 2026, and you can’t reuse that allowance until 2027. Japan’s Financial Services Agency asked for same-year restoration in its request for the 2026 tax reform, but it was not adopted. The FSA asked again in August 2026 for the 2027 reform — until an outline actually adopts it, the following-year rule stands. If you’re planning to sell and rebuy quickly, this one-year lag is worth building into your plan.

Three Practical Scenarios

Situation	Suggested Strategy
Just getting started	Fill the Tsumitate Allowance with recurring monthly purchases first, then add individual stock picks through the Growth Allowance as extra funds allow
You have a lump sum to invest	Use the Growth Allowance (up to JPY 2.4M/year) first, but plan ahead so you don’t run into the JPY 12M lifetime cap sooner than expected
You already hold an old-style NISA account	Old NISA holdings are tracked separately from the new JPY 18M lifetime cap — don’t add your old account’s balance when calculating how much of the new limit you’ve used

Coming in January 2027: The Tsumitate Allowance for Children

What was a proposal in December 2025 is now law. The tax amendment promulgated on March 31, 2026 removes NISA’s minimum age, so from January 1, 2027 residents aged 0 to 17 can have a Tsumitate Allowance too — JPY 600,000 a year and JPY 6 million lifetime. There is no Growth Allowance for minors.

• It moves over automatically at 18. The child’s holdings carry into the adult NISA without a new account.
• Withdrawals are restricted. Before the year the child turns 12 (as of March 31), money can only come out for a disaster or similar reason confirmed by the tax office. From then until the restrictions end around age 18, it can also be withdrawn to pay the child’s education or living costs, with a written reason submitted to the broker.
• Same product rules as the adult Tsumitate Allowance — recurring purchases of eligible funds only.

This article is for general informational purposes only and is not investment advice regarding any specific security or product. NISA’s detailed rules and eligible products are set by Japan’s Financial Services Agency and individual brokerages and can change, so confirm the latest official details before investing, and consult a qualified tax or financial professional for your specific situation. All investing carries the risk of loss.