The Go To Travel initiative will subsidize vacations by up to 20,000 yen (about $200 USD) a day in the form of large discounts and vouchers that can be used at local shops and restaurants, the Kyodo news agency announced.
The plan could begin at the end of July, after travel restrictions for the coronavirus have been eased.
It will apply to people who make reservations through Japanese travel agencies or directly with traditional ryokan hotels and inns.
Japan May Cover 50% Of Your Next Holiday's Expenses With Their $12.5 Billion Travel Subsidy Program https://t.co/wrUNQHTJiE
The Japan Travel Agency said in a tweet Wednesday that it intended to "stimulate demand for domestic travel within Japan after the Covid-19 pandemic. To do so, it will only cover a portion of the domestic travel expenses."
The subsidies do not apply to the travel expenses of foreign tourists.
Data released this week showed that the number of overseas visitors dropped by more than 99% last month to less than 3,000 as a result of the pandemic, with domestic travel severely restricted by the country's state of emergency.