①If an individual who files a blue return pays salary or other wages to domestic employees in any year from 2025 to 2027 (excluding, for an individual who started business in 2025 or later, the year that includes the date on which the individual started the business, and the year that includes the date on which the individual discontinued the business) and falls under a specified individual as of December 31 of that year, and the ratio of the amount obtained by deducting the individual's comparative amount of salary or other wages paid to continuing employees from the individual's amount of salary or other wages paid to continuing employees for that year to that comparative amount of salary or other wages paid to continuing employees (referred to as the "rate of increase in salary or other wages paid to continuing employees" in item (i)) is 4 percent or more, the amount calculated by multiplying the individual's credit-eligible increase in salaries, etc. paid to employees for that year by 10 percent (if the individual meets the requirements listed in the following items in that year, the rate obtained by adding to 10 percent the rate specified in each of those items (if the individual meets all of the requirements listed in the following items in that year, the sum of the rates specified in those items)) (hereinafter referred to as the "maximum tax credit" in this paragraph) is deducted, pursuant to the provisions of Cabinet Order, from the amount of income tax on the amount of gross income of the individual for that year. In this case, if the maximum tax credit exceeds the amount equivalent to 20 percent of the individual's income tax on business income before adjustment for that year (meaning income tax on business income before adjustment prescribed in Article 10, paragraph (8), item (iv); the same applies in the following paragraph and paragraph (3)), the amount to be deducted is limited to the amount equivalent to that 20 percent.

②If a small and medium sized business operator prescribed in Article 10, paragraph (8), item (vi) who files a blue return (hereinafter referred to as a "small and medium sized business operator" in this paragraph) pays salary or other wages to domestic employees in any year from 2019 to 2027 (excluding a year for which the provisions of the preceding paragraph are applied, and, for a small and medium sized business operator that started business in 2019 or later, the year that includes the date on which it started the business, and the year that includes the date on which it discontinued the business), and the ratio of the amount obtained by deducting the small and medium sized business operator's comparative amount of salaries, etc. paid to employees from its amount of salaries, etc. paid to employees for that year to that comparative amount of salaries, etc. paid to employees (referred to as the "rate of increase in salaries, etc. paid to employees" in item (i)) is 1.5 percent or more, the amount calculated by multiplying the small and medium sized business operator's credit-eligible increase in salaries, etc. paid to employees for that year by 15 percent (if the small and medium sized business operator meets the requirements listed in the following items in that year, the rate obtained by adding to 15 percent the rate specified in each of those items (if it meets all of the requirements listed in the following items in that year, the sum of the rates specified in those items)) (hereinafter referred to as the "maximum credit for small and medium sized business operators" in this paragraph and paragraph (4), item (ix)) is deducted, pursuant to the provisions of Cabinet Order, from the amount of income tax on the amount of gross income of the small and medium sized business operator for that year. In this case, if the maximum credit for small and medium sized business operators exceeds the amount equivalent to 20 percent of the small and medium sized business operator's income tax on business income before adjustment for that year, the amount to be deducted is limited to the amount equivalent to that 20 percent.

③If, in a year (excluding the year that includes the date on which the individual discontinued the business), the amount of salaries, etc. paid to employees of an individual who files a blue return exceeds the individual's comparative amount of salaries, etc. paid to employees, and the individual has a carried-over excess of the tax credit limit, the amount equivalent to the carried-over excess of the tax credit limit is deducted, pursuant to the provisions of Cabinet Order, from the amount of income tax on the amount of gross income for that year. In this case, if the individual's carried-over excess of the tax credit limit for that year exceeds the amount equivalent to 20 percent of the individual's income tax on business income before adjustment for that year (if there is an amount deducted from the amount of income tax on the amount of gross income for that year pursuant to the provisions of the preceding two paragraphs in that year, the remaining amount after deducting that amount), the amount to be deducted is limited to the amount equivalent to that 20 percent.

④In this Article, the meanings of the terms listed in the following items are as prescribed respectively in those items:

⑤The number of months referred to in item (viii) of the preceding paragraph is calculated in accordance with the calendar, and any fraction of less than one month is counted as one month.

⑥The provisions of paragraphs (1) and (2) apply only if a document stating the credit-eligible increase in salaries, etc. paid to employees (including, if the application of the provisions of paragraph (1) is sought, the amount of salary or other wages paid to continuing employees and the comparative amount of salary or other wages paid to continuing employees), the amount to be deducted, and the details of the calculation of that amount, which are subject to the deduction under those provisions, is attached to the final return (including an amended return or written request for reassessment, if one is filed to increase the amount to be deducted pursuant to those provisions). In this case, the credit-eligible increase in salaries, etc. paid to employees serving as the basis for the calculation of the amount to be deducted pursuant to paragraph (1) or (2) is limited to the credit-eligible increase in salaries, etc. paid to employees stated in the document attached to the final return.

⑦The provisions of paragraph (3) apply only if a written statement of the carried-over excess of the tax credit limit is attached to the final return for each year from the year in which the provisions of paragraph (2) were applied onward, and a document stating the carried-over excess of the tax credit limit, the amount to be deducted, and the details of the calculation of that amount, which are subject to the deduction under paragraph (3), is attached to the final return for the year for which the application of the provisions of paragraph (3) is sought (including an amended return or written request for reassessment, if one is filed to increase the amount to be deducted pursuant to the provisions of that paragraph).

⑧Beyond what is provided for in paragraph (4) through the preceding paragraph, the calculation of the comparative amount of salaries, etc. paid to employees in the case where an individual seeking the application of the provisions of paragraphs (1) through (3) is a person who has succeeded to a business generating business income through inheritance or universal legacy, the determination of whether the requirements prescribed in those provisions are satisfied in the case where the comparative amount of salary or other wages paid to continuing employees or the comparative amount of salaries, etc. paid to employees is zero, and other necessary matters concerning the application of those provisions are specified by Cabinet Order.

⑨With regard to the calculation of the amount of income tax listed in Article 120, paragraph (1), item (iii) of the Income Tax Act in the case where the provisions of paragraphs (1) through (3) are applied to income tax for the relevant year, the phrase "Chapter III (Calculation of Tax Amount)" in that item is deemed to be replaced with "Chapter III (Calculation of Tax Amount) and Article 10-5-4, paragraphs (1) through (3) (Special Income Tax Credit Where the Amount of Salary or Other Wages Paid Has Increased) of the Act on Special Measures Concerning Taxation".