The total amount of furusato n§à?zei hometown donations to local governments across Japan hit a record high for the fifth consecutive year in fiscal 2024, the internal affairs ministry said Thursday.

The annual amount of such donations rose 1.1-fold from the previous year to ?1.27 trillion ($8.44 billion).

The use of the donation system is believed to have increased due to growing recognition of and increasing demand for return gifts, including daily necessities, amid inflation.

Of the country¡¯s 47 prefectures, only Fukuoka, Saga and Kagoshima received lower donations than in fiscal 2023.

The number of donation cases accepted by local governments was almost unchanged at 58,787,253.

The city of Takarazuka, Hyogo Prefecture, received the largest amount of donations, at ?25.66 billion, including some ?25.4 billion contributed by a local couple for the rebuilding of a city hospital.

Takarazuka was followed by the town of Shiranuka, Hokkaido, at ?21.16 billion, and the city of Izumisano, Osaka Prefecture, at ?18.15 billion.

Under the furusato n§à?zei system, the amount of the donation minus ?2,000 is deducted from the donor¡¯s residential and other taxes the next year.

The total sum of residential tax deductions under the system in fiscal 2025 will grow 10% from the preceding year to a record high of ?871 billion, including ?34.33 billion in Yokohama, ?19.83 billion in Nagoya and ?19.22 billion in the city of Osaka. This indicates a remarkable outflow of tax revenues from urban areas.

The number of people who will receive a deduction in fiscal 2025, which ends in March 2026, will also hit a record high of 10,796,698, about 1.1 times the previous year.

The furusato n§à?zei system limits return gifts to local products worth less than 30% of the donation amount. In addition, it requires that the total amount of necessary costs, including commission and shipping fees paid to business operators, should be no more than 50% of the donation amount.

In fiscal 2024, the total costs were ?590.1 billion, accounting for 46.4% of the donation amount, down 2.2 percentage points from the previous year. Of the total, ?165.6 billion was paid to portal site operators.