The New Defense Surtax: A 1% Add-on from January 2027
From January 2027, a "Special Defense Income Tax" that adds 1% on top of the income-tax amount begins. The key point is that it is a surtax levied "on the tax amount", not on the rate itself. We look, in practical terms, at how it affects payroll and withholding.
- The basic mechanism of the defense surtax
- What "1% of the tax amount" means
- The impact on payroll and withholding
- What companies should prepare
01How the defense surtax works
The defense surtax is not a tax levied directly on income, but a surtax adding 1% on top of the calculated "income tax amount". It helps to think of it as similar to the Special Reconstruction Income Tax (2.1% of income tax).
| Item | Details |
|---|---|
| Base | The underlying income-tax amount |
| Rate | 1% of the income tax (a surtax) |
| Start | From January 2027 (planned) |
| Nature | Collected as an add-on to income tax |
02Impact on payroll and withholding
Companies that withhold income tax from wages will need to adjust their withholding calculations and tax tables in time for the start date. If you use payroll software, the provider's update usually handles it automatically, but confirming the timing of that support is essential.
03What companies should prepare
- Check the planned support version of the payroll software you use
- Share the information with staff handling withholding
- Prepare an explanation in case employees ask
- Handle changes to the forms for year-end adjustment and withholding slips
Summary
The defense surtax adds 1% on top of the income-tax amount, planned to start in January 2027.
Its feature is that it applies to the "tax amount", not income — similar to the Special Reconstruction Income Tax.
Confirm when your payroll software will support it, and review your withholding admin, before it takes effect.
Talk to Aquamarine about tax & business
- Free first consultation
- Online consultations available
- AI & DX supported
Sources & References
This article is based on information available at the time of publication. Rules and systems may change. Please consult a professional before making any individual decisions.
