Japan’s fiscal 2026 budget was enacted Tuesday following its approval in the Upper House, the first time in 11 years the spending bill has failed to pass before April 1.
The ¥122.3 trillion budget — a ¥7.1 trillion increase over the previous year — is the largest ever. It reflects Prime Minister Sanae Takaichi’s goal of an expansionary fiscal policy and includes ¥39 trillion for social security expenses, and a ¥760 billion increase overall, a large part of which is a ¥520 billion increase over 2025 in response to the increasing number of elderly.
The new budget adds ¥700 billion for free high school tuition and public elementary school meals. About ¥370 billion will be shared by the national government and the rest by local governments.
It also includes ¥8.8 trillion for defense expenditures, an increase of ¥300 billion compared to last year.
The spending bill’s passage comes after the government was forced to enact an emergency stopgap budget on March 30, after it was clear the Upper House would not approve the full budget before March 31, the end of the fiscal year. The more powerful Lower House approved the budget on March 13.
It’s the first time since 2015 that parliament has failed to pass the annual budget by the required deadline. The delay was the result of Takaichi’s decision to call a snap election in February, a month the Lower House normally spends debating the budget. It was the first general election held in February since 1990.
The Upper House has up to 30 days to debate the budget after receiving it from the Lower House. If it fails to reach an agreement, the Lower House decision stands and the bill becomes law.
Upper House opposition lawmakers demanded as much time as possible to debate the bill before agreeing to its passage on Tuesday.
The ruling Liberal Democratic Party holds a two-thirds majority in the lower chamber, but the LDP and its coalition partner, the Japan Innovation Party, also known as Nippon Ishin no Kai, are four seats short of a majority in the 247-member upper chamber.
The ruling coalition convinced independent lawmakers and the small two-member opposition Conservative Party of Japan to vote for the budget after major parties like the Constitutional Democratic Party of Japan and Komeito voted against it.