Must-See for Families with Disabled Children! Introducing Allowance Systems and Financial Support Available

In families raising children with disabilities, daily expenses such as medical bills, therapy costs, and living expenses can easily add up. Additionally, many families find it challenging to have both parents working, which can lead to a significant financial burden.

To support these unstable situations, the national and local governments have established various economic support systems under the "Support System for Children with Disabilities," including allowances, subsidies, and tax benefits. By effectively utilizing these systems, families can reduce their monthly expenses and prepare for the future.

However, many people struggle with questions like "What systems are available?" or "Is my family eligible?" The content and application procedures for these systems vary by municipality, making it difficult to even find the information.

This article systematically organizes the financial support systems available to families with children with disabilities and provides a clear explanation based on the latest information as of 2025.

We will introduce three types of support: "Allowances," "Medical Expense Subsidies," and "Tax Benefits," so please check them against your child's and family's situation.

There are also numerous discounts available using a disability certificate. The article below is packed with valuable information, so be sure to check it out.

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1. What Are the Financial Support Systems Available for Families with Children with Disabilities?

To support families raising children with disabilities, the national and local governments have established multiple public support systems. These systems aim to create an environment where children can grow and aim for independence within the community.

The basic philosophy of support includes understanding the child's developmental stage and the characteristics of their disability, and the idea that families and communities should work together to support the child. In other words, raising a child with a disability is not solely the responsibility of the family but is positioned as something that society as a whole should address.

The disabilities covered include physical, intellectual, mental, and developmental disabilities, as well as children requiring medical care or those with intractable diseases. Various supports are provided in terms of living, medical, and economic aspects for this wide range of targets.

Economic support systems are broadly divided into the following three categories:

• Allowances (Grants)
  Direct financial support for children with disabilities and their families
  
• Medical Expense Subsidies
  Reduction or assistance with out-of-pocket expenses incurred at medical institutions
  
• Tax Benefits
  Systems that allow for deductions in income tax, resident tax, inheritance tax, etc.
  

Additionally, tax law provisions such as non-taxable measures for specific gift taxes, non-taxable benefits under the Mental and Physical Disability Support Mutual Aid System, and non-taxable interest on small savings (Maruyu) are also available.

It should be noted that eligibility for support is not solely determined by the presence of a disability certificate. Individual assessments are made based on actual living conditions and the degree of disability, including a doctor's diagnosis or evaluation by a child guidance center.

Understanding "who can receive what support" in the disability support system is the starting point. In the next section, we will explain the specific types and application methods for "receivable money (allowances)."

2. Apply for Allowances and Receive Payments

2-1. Types of Allowances, Eligibility, and Application Methods

There are mainly two types of allowances that families with children with disabilities can receive: "Special Child Rearing Allowance" and "Welfare Allowance for Children with Disabilities."

Both are public benefits provided according to the child's disability and are designed to alleviate the family's financial burden.

Both allowances are treated as non-taxable income and are not subject to income tax or resident tax.
They can also be used in conjunction with other systems such as the Child Rearing Allowance, so there is no need to hesitate about overlapping applications.

Since the eligibility conditions and procedures differ for each allowance, let's take a closer look at the next items.

2-1-1. Special Child Rearing Allowance

The Special Child Rearing Allowance is a system that provides benefits to guardians raising children under the age of 20 with disabilities.

The eligible disabilities include physical, intellectual, developmental, or mental disabilities, and recognition is given when special support is needed in daily life.

The payment amount and classification vary depending on the degree of disability, with Grade 1 receiving "55,350 yen per month" and Grade 2 receiving "36,860 yen per month" (applicable from April 2021).

Payments are divided into three times a year (April, August, December), and the total amount up to the previous month is deposited into a designated account.

Reference: About Special Child Rearing Allowance | Ministry of Health, Labour and Welfare

The Special Child Rearing Allowance is not subject to taxation, and no income tax or resident tax is levied. It can also be received simultaneously with the Child Rearing Allowance and the Welfare Allowance for Children with Disabilities.

Next, let's explain the application and procedure flow.

Applications can be made at the municipal office where you live. Required documents include the application form, a doctor's certificate, and income certificates. Even without a physical disability certificate or a rehabilitation certificate, there are cases where eligibility is determined based on a doctor's diagnosis.

The review period after application is approximately 1 to 3 months, and the results are notified by mail.

Next, let's discuss the procedures and precautions while receiving the allowance.

Recipients must submit a "Current Status Report (Income Status Report)" between August 12 and September 11 each year.
If this report is not submitted for two years, the eligibility to receive the allowance will be lost, so caution is needed.

If the child enters a welfare facility or starts receiving public pensions, it is necessary to promptly make changes to the procedures.

Failure to complete the procedures may result in suspension of payments or a request for repayment, so be sure to check the submission deadlines for documents.

Reference: Special Child Rearing Allowance Disability Degree Certification Standards (Enforcement Order Table 3 of the Act on the Payment of Special Child Rearing Allowance, etc.) | Osaka Prefecture

2-1-2. Welfare Allowance for Children with Disabilities

The Welfare Allowance for Children with Disabilities is for severely disabled children (under 20 years old) receiving care at home.
It is not available for those residing in facilities or receiving pensions for the same disability.

The target is children who require constant care in daily life.
A monthly amount of 16,100 yen is paid, and payments are made four times a year in February, May, August, and November, with the total amount up to the previous month being deposited.

The Welfare Allowance for Children with Disabilities has income restrictions. The income of not only the recipient but also the spouse and dependents (parents, grandparents, children, siblings, etc. living together) is subject to judgment.

Income is calculated by subtracting medical expenses and disability deductions (270,000 yen) or special disability deductions (400,000 yen) from the taxable income for resident tax.
If the limit is exceeded, payments are suspended, and if income returns within the standard, payments resume from August of the following year.

Reference: About Welfare Allowance for Children with Disabilities | Ministry of Health, Labour and Welfare

Applications are made at the municipal office, and a prescribed medical certificate is required. Since it may take time from medical examination to issuance at medical institutions, early preparation is recommended. If there are changes in address or dependents, be sure to report them.

The Welfare Allowance for Children with Disabilities is an important benefit to support the home life of severely disabled children. If you are unsure whether you qualify, consult the disability welfare department of your municipality.

Reference: Welfare Allowance for Children with Disabilities | Yokohama City

There are various systems for disability support. Families of people with disabilities should be aware of them. Please also check the article below.

Reference:

3. How to Use and Cautions for Medical Expense Subsidy Systems

3-1. Self-Support Medical Care (Developmental Medical Care, Psychiatric Outpatient Medical Care)

The Self-Support Medical Care System is a system that reduces the out-of-pocket medical expenses for outpatient visits and surgeries.
In principle, the out-of-pocket cost is 10%, and the monthly maximum amount is determined based on household income.

Self-support medical care is divided into the following three categories according to the target and purpose:

• Psychiatric Outpatient Medical Care
  For those with mental illnesses such as schizophrenia, depression, and developmental disorders (such as ADHD) who require continuous treatment.
  
• Developmental Medical Care
  For children under 18 who are expected to improve bodily functions through surgery or treatment.
  
• Rehabilitation Medical Care (for adults)
  Exists as a reference but is not covered here.
  

There are income-based caps on out-of-pocket costs, and any amount exceeding the cap is covered by public funds. However, hospitalization costs and treatment costs unrelated to mental illness are not covered.

When using the system, present the "Self-Support Medical Care Recipient Certificate" and "Out-of-Pocket Cost Cap Management Form" at each visit. Forgetting to present them will temporarily result in a 30% burden, requiring a "reimbursement" procedure later, so be careful.

Also, the system can only be used at the medical institutions and pharmacies selected at the time of application, so if there are changes, reapplication is necessary. The recipient certificate is valid for one year, and renewal can be applied for three months before the expiration date. The procedure usually takes about 1 to 2 months, so early application is advised.

The medical certificate (opinion letter) is required every two years if the treatment content does not change (for "Developmental Medical Care" and "Rehabilitation Medical Care," it is required every year).
By utilizing the Self-Support Medical Care System, you can continue treatment while reducing the burden associated with ongoing care.

3-2. Pediatric Chronic Specific Disease Medical Expense Subsidy

The Pediatric Chronic Specific Disease Medical Expense Subsidy System is a mechanism to reduce the medical expenses of children with chronic illnesses. The target is children under 18, and if receiving benefits at 18, it can be extended until under 20.

The target diseases are those specified by the Ministry of Health, Labour and Welfare as pediatric chronic specific diseases, with detailed criteria for each disease.

For example, in the case of bronchial asthma, criteria such as "having three or more severe attacks within three months in the past year" are used as a guideline for the frequency of attacks or symptoms.

When receiving assistance, the out-of-pocket medical expenses are reduced to 20%, and a monthly cap is set based on household income. Additionally, if conditions for severe patients are met, such as exceeding a total medical expense of 50,000 yen six times a year, "severe patient certification" can be obtained, further reducing the cap.

The target includes insurance-covered medical treatment at designated medical institutions and meal costs during hospitalization.

On the other hand, non-insurance costs such as transportation fees, private room charges, and document fees are not covered.

The start date for assistance is, in principle, the application date, but if separate documents are submitted, it may be possible to start receiving benefits retroactively up to one month based on the diagnosis date.

In addition to medical expense subsidies, some municipalities offer daily life equipment provision systems. To be sure if you qualify, check with the welfare department of your municipality.

3-3. Medical Expense Subsidy System for Severely Physically and Mentally Disabled Persons

The Medical Expense Subsidy System for Severely Physically and Mentally Disabled Persons is a system that provides public assistance for medical expenses for those with severe disabilities. The main targets are those with a physical disability certificate of levels 1 to 3 (varies by municipality).

Under this system, the out-of-pocket medical expenses for any disease are free or reduced (e.g., to around 500 yen). While meal costs during hospitalization are borne by the individual, other medical expenses are covered.

The system's name and eligibility criteria vary by municipality.

For example, in Hiroshima City, levels 1 to 3 are covered, but in other areas, it may be limited to level 2. Therefore, it is essential to confirm at the local office where you reside.

Additionally, if you receive treatment outside the prefecture, you must, in principle, pay the full amount first and then apply to the municipality for a refund through reimbursement. The application is retroactively applied to the month of issuance of the physical disability certificate.

Moreover, it can be used in conjunction with the Self-Support Medical Care System.

However, after the self-support medical care reduces the out-of-pocket costs, the remaining amount is further supplemented by the severe medical expense subsidy.

If income exceeds the standard or if the disability level decreases and becomes ineligible, the subsidy qualification may be lost retroactively.

In this case, repayment of the subsidized medical expenses may be required, so promptly report any income changes or level changes.

By utilizing medical expense subsidy systems, you can significantly reduce the burden of treatment and transportation costs. Since the target and application destination differ for each system, the first step is to consult with the welfare department or health center of your municipality and check the applicable systems.

In addition to medical expenses, there are also subsidy systems for assistive devices. It's worth checking out as it contains beneficial information.

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4. What Are the Tax Benefits Families with Children with Disabilities Should Know?

In families raising children with disabilities, the burden of taxes cannot be ignored in addition to medical and living expenses.

To alleviate the financial burden on households, the government has established tax benefit systems.

Here, we will explain three representative systems that families with children with disabilities can utilize.

4-1. Disability Deduction

The Disability Deduction is a system that allows a certain amount to be deducted from taxable income if the taxpayer, spouse, or dependent family member qualifies as a "disabled person."

The purpose is to consider the living burden due to disability and maintain fairness in tax burdens.

Deductions are categorized by the degree of disability and whether the person lives with the taxpayer. Refer to the table below.

For example, those with a physical disability certificate of levels 1 or 2, a mental disability health and welfare certificate of level 1, or a rehabilitation certificate with an A rating qualify as "special disabled persons."

If living together, they qualify as "co-resident special disabled persons," allowing for a larger deduction.

Children under 16 are also included in the disability deduction.

Additionally, be aware of inheritance tax deductions.

If an heir is a disabled person under 85, they can also receive deductions in inheritance tax.
The deduction amount is calculated as the number of years until reaching 85 × 100,000 yen (200,000 yen for special disabled persons).

However, the disability deduction is not automatically applied. The individual must apply for it. A copy of the certificate or a "Disability Deduction Certificate" issued by the municipality must be attached.

For employees, fill out the "Declaration of Dependents (Change)" during year-end tax adjustments.
Even if you forget to apply during year-end adjustments, you can apply within five years through the following year's tax return.

For self-employed individuals, enter the deduction amount on the tax return.

Prepare the necessary documentation in advance and complete the procedures within the deadline.

Reference: Disability Deduction | National Tax Agency

Which category you fall into depends on the degree of disability and whether you live together, so check the National Tax Agency's website or with the local tax office.

By applying during year-end tax adjustments or tax returns, deductions will be applied, so don't forget to complete the procedures.

4-2. Automobile Tax Exemption

For families using a car for the transportation or schooling of a child with a disability, the automobile tax exemption system can be utilized. This system applies not only when the disabled child drives but also when the family uses the car for transportation.

The exemption applies to those with a physical disability certificate, rehabilitation certificate, or mental disability health and welfare certificate of a certain grade, or their families.
Ordinary cars fall under prefectural tax, while light cars fall under municipal tax, so the application destination varies by car type.

The exemption includes:

• Full or partial exemption of automobile tax (annual tax)
  
• Exemption of automobile acquisition tax and light vehicle tax
  

and more.

The procedure is usually applied for when the tax notice arrives from April to May. A copy of the certificate, a seal, a vehicle inspection certificate, and an application form are required.

There are also cases where subsidies can be used for gasoline. For more details, see the article below. It's information you don't want to miss.

Reference:

4-3. Non-Taxable System for Small Savings Interest Income for Disabled Persons (Commonly Known as "Maruyu")

The Maruyu system is a non-taxable savings system available to those with a physical disability certificate, mothers receiving child-rearing allowances, and others.

By using the Maruyu system, interest on deposits and government bonds becomes non-taxable.

The table below shows the non-taxable targets and limits. Use it as a reference.

In total, interest on principal up to 7 million yen is non-taxable.

The eligible individuals are:

• Those with a physical disability certificate, rehabilitation certificate, or mental disability health and welfare certificate
  
• Those receiving child-rearing allowances, basic survivor's pensions, or widow's pensions
  

When using it, present the certificate, pension certificate, and My Number card at the financial institution's counter for a check, and the interest on the registered account will be automatically treated as non-taxable.

However, some financial institutions, such as internet banks, may not handle Maruyu, so check the availability when considering its use.

Although significant interest cannot be expected in the current low-interest environment, it has the effect of reducing the tax burden in the long term.

It's one of the systems to consider when thinking about savings for the child's future.

Reference: Maruyu (Non-Taxable Savings for Disabled Persons) | National Tax Agency

5. Conclusion

In families raising children with disabilities, costs are incurred in all aspects, including medical, living, and education. To lighten the family's burden, the national and local governments have established various support systems.

The systems introduced in this article are mainly composed of the following three pillars: