Japan’s corporate income tax credit system for R&D system is designed to promote investments in research and development (R&D). Government ministry and agency policy evaluation reports indicate that this system has increased R&D spending. The findings of this study indicate increased R&D spending in firms with high debt-to-asset ratios but no clear evidence that the gross system increased R&D spending. In addition, the study did not find evidence that limitations on carryforward deductions impacted R&D spending. Based on these results, Japan’s corporate income tax credit system’s effectiveness remains inconclusive. We suggest developing a model to test the system’s effectiveness to obtain a comprehensive understanding of the current status.