Tax changes in Finland in 2025
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Important tax changes in Finland in 2026
Taxes are the most important source of government revenue. According to the government proposal supplementing the 2025 budget proposal from 23.09.2024, the State budget revenue for 2025 is estimated at EUR 76,6 billion (excluding net borrowing), with tax revenue accounting for EUR 67,3 billion (88 %). Tax revenues are estimated to grow by approximately 0,7 % (0,5 billion euros) compared to the main budget for 2024.
The weak economic situation has led to a decline in tax revenue in 2024. Compared to the budgeted 2024 figures (including the second supplementary budget proposal), tax revenue is expected to increase by 3.3%, and total revenue by 1.8% in 2025.
Taxation of earned income (salary and pension)
Ansiotulojen (palkan ja eläkkeen) verotus
Tax rate changes for wage earners in 2025 depend on factors such as income level, number of dependent children, and municipality. The progressivity of the income tax will increase: taxes will generally decrease at lower income levels and increase at higher ones.
Taxation will be reduced in the future by the number of children, especially for low- and middle-income earners, as a new child supplement (lapsikorotus) will be added to the employment income credit (työtulovähennys , earned income deduction).
A €100 million tax relief will be targeted at low-income earners by increasing the tax credit for employment income (työtulovähennys). To strengthen the tax base of municipalities, the earned income allowance (ansiotulovähennys) will be removed and the employment income credit (työtulovähennys) will be expanded. This will slightly ease taxation in municipalities with lower-than-average tax rates and increase taxes in municipalities with higher-than-average municipal tax rates.
Еmployment income credit (Työtulovähennys) and the Еarned income allowance (Ansiotulovähennys)
- The Employment income tax credit (Työtulovähennys) is a tax benefit for individuals that applies to taxable wages or profit-shares of a small business and other similar earnings, first reducing state income tax directly. If the state income tax is less than the amount of credit (deduction), after that this tax credit applied proportionally to reduce the municipal tax, church tax, and healthcare contributions.
- The deduction called ‘earned-income allowance’ (Ansiotulovähennys) in 2024 applies to wages or profit-shares of a small business and other comparable earnings, but not pensions or social benefits, reducing both state and municipal taxes. It will be removed in 2025.
- The main difference is that the employment income credit (Työtulovähennys) focuses solely on state income tax, while the earned income allowance (Ansiotulovähennys) affects both state and municipal taxes.
Changes in wage earners tax-resembling social insurance contributions will tighten the overall wage taxation.
Pension taxation will be affected in 2025 not only by the tax and pension index adjustments, but also by the pension income deduction cut agreed upon in the government’s spring 2024 framework talks. The pension income deduction (eläketulovähennys) is linked to the full national pension (kansaneläke) amount. The additional tax on pension income (eläketulon lisävero) will remain unchanged.
Overall, pension tax rates will rise for those receiving monthly pensions of approximately €2,500–4,500. The maximum increase in pension taxation will be approximately one percentage point for a monthly pension of €4,000. Pensions will increase by approximately 1.3% in 2025 based on the earnings-related pension index (työeläkeindeksi).
The possible change in the municipal tax rate of the residential municipality will also affect next year's earned income taxation.
IN DETAIL: Estimation of the changes in payroll taxation, 2024-2025
| Salary 2024, euros / month |
Annual income 2024, euros |
Tax rate 2024,% |
Tax rate 2025,% |
Change in tax rate, % - points |
Easing (-)/Increasing (+) EUR / year |
| 1 600 |
20 000 |
12,1 % |
11,7 % |
-0,4 % |
-80 |
| 1 800 |
22 500 |
14,6 % |
14,2 % |
-0,4 % |
-90 |
| 2 000 |
25 000 |
16,6 % |
16,4 % |
-0,2 % |
-50 |
| 2 200 |
27 500 |
18,3 % |
18,7 % |
0,4 % |
+110 |
| 2 400 |
30 000 |
20,4 % |
20,6 % |
0,2 % |
+60 |
| 2 600 |
32 500 |
22,1 % |
21,9 % |
-0,2 % |
-70 |
| 2 800 |
35 000 |
23,3 % |
23,2 % |
-0,1 % |
-40 |
| 3 000 |
37 500 |
24,3 % |
24,8 % |
0,5 % |
+190 |
| 3 200 |
40 000 |
25,9 % |
26,3 % |
0,4 % |
+160 |
| 3 400 |
42 500 |
27,2 % |
27,5 % |
0,3 % |
+130 |
| 3 600 |
45 000 |
28,4 % |
28,7 % |
0,3 % |
+140 |
| 3 800 |
47 500 |
29,5 % |
29,8 % |
0,3 % |
+140 |
| 4 000 |
50 000 |
30,5 % |
30,7 % |
0,2 % |
+110 |
| 4 200 |
52 500 |
31,3 % |
31,6 % |
0,3 % |
+160 |
| 4 400 |
55 000 |
32,1 % |
32,4 % |
0,3 % |
+170 |
| 4 600 |
57 500 |
32,9 % |
33,2 % |
0,3 % |
+170 |
| 4 800 |
60 000 |
33,6 % |
34,0 % |
0,4 % |
+240 |
| 5 000 |
62 500 |
34,4 % |
34,7 % |
0,3 % |
+190 |
| 5 500 |
68 750 |
36,0 % |
36,3 % |
0,3 % |
+210 |
| 6 000 |
75 000 |
37,4 % |
37,6 % |
0,2 % |
+150 |
| 6 500 |
81 250 |
38,5 % |
38,7 % |
0,2 % |
+160 |
| 7 000 |
87 500 |
39,4 % |
39,7 % |
0,3 % |
+260 |
| 7 500 |
93 750 |
40,2 % |
40,5 % |
0,3 % |
+280 |
| 8 000 |
100 000 |
41,0 % |
41,7 % |
0,7 % |
+700 |
| 8 500 |
106 250 |
41,9 % |
42,7 % |
0,8 % |
+850 |
| 9 000 |
112 500 |
42,7 % |
43,7 % |
1,0 % |
+1130 |
| 10 000 |
125 000 |
44,2 % |
45,1 % |
0,9 % |
+1130 |
| 11 000 |
137 500 |
45,3 % |
46,1 % |
0,8 % |
+1100 |
| 12 000 |
150 000 |
46,3 % |
46,9 % |
0,6 % |
+900 |
| 13 000 |
162 500 |
47,1 % |
47,6 % |
0,5 % |
+810 |
| 14 000 |
175 000 |
47,9 % |
48,4 % |
0,5 % |
+880 |
| 15 000 |
187 500 |
48,5 % |
49,0 % |
0,5 % |
+940 |
| 20 000 |
250 000 |
50,8 % |
51,3,0 % |
0,5 % |
+1250 |
IN DETAIL: Estimation of the changes in Pension taxation, 2024-2025
| Pension 2024, euros / month |
Annual income 2024, euros |
Tax rate 2024,% |
Tax rate 2025,% |
Change in tax rate, % - points |
Easing (-)/Increasing (+) EUR / year |
| 1 200 |
14 400 |
2,5 % |
2,3 % |
-0,2 % |
-30 |
| 1 400 |
16 800 |
8,3 % |
8,1 % |
-0,2 % |
-30 |
| 1 600 |
19 200 |
12,7 % |
12,6 % |
-0,1 % |
-20 |
| 1 800 |
21 600 |
16,0 % |
16,0 % |
0 % |
0 |
| 2 000 |
24 000 |
17,9 % |
17,8 % |
-0,1 % |
-20 |
| 2 250 |
27 000 |
19,7 % |
19,7 % |
0 % |
0 |
| 2 500 |
30 000 |
21,7 % |
21,9 % |
0,2 % |
+60 |
| 2 750 |
33 000 |
22,8 % |
23,1 % |
0,3 % |
+100 |
| 3 000 |
36 000 |
24,5 % |
24,9 % |
0,4 % |
+140 |
| 3 500 |
42 000 |
27,7 % |
28,3 % |
0,6 % |
+250 |
| 4 000 |
48 000 |
30,0 % |
31,0 % |
1,0 % |
+480 |
| 4 500 |
54 000 |
32,8 % |
33,0 % |
0,2 % |
+110 |
| 5 000 |
60 000 |
34,8 % |
34,7 % |
-0,1 % |
-60 |
| 6 000 |
72 000 |
37,4 % |
37,3 % |
-0,1 % |
-70 |
| 7 000 |
84 000 |
39,2 % |
39,1 % |
-0,1 % |
-80 |
| 10 000 |
120 000 |
44,6 % |
44,6 % |
0 % |
0 |
Tax cards for 2025
Vuoden 2025 verokortti
From 2025, tax cards will be valid from January 1st, with the income threshold calculated for the full year (12 months). Previously, tax cards became effective in February.
Read more: Finnish Tax Card. Changes Coming in 2025
Pre-completed tax return
Esitäytetty veroilmoitus
Starting in 2025, taxpayers who receive wages or pensions must file their pre-completed tax returns earlier. The new deadlines will be 15, 22, and 29 April, instead of the previous May deadlines.
Late-Payment Interest Rates and Credit interest on tax refunds
Viivästyskorot ja hyvityskorko
In 2025, late-payment interest rates for taxes will increase. Inheritance tax late-payment interest will rise from 7.5% to 8%, and for other taxes, from 11% to 11.5%. Relief-based late-payment interest will also go up from 6% to 6.5%. Additionally, credit interest on tax refunds will increase from 2% to 2.5%.
Public broadcasting tax
Henkilöiden Yle-vero
Starting in 2025, the public broadcasting tax will be reduced. The tax will only apply to the part of net taxable earned or capital income, or income under YEL or MYEL, exceeding €15,150, up from the current €14,000. The tax rate remains at 2.5% for the amount above this threshold. The maximum tax amount will decrease from €163 to €160, lowering the tax liability for many individual taxpayers and exempting some of them from paying it altogether.
Tax credit for household expenses
Kotitalousvähennys
Beginning in 2025, the maximum tax credit for household expenses will be €1,600, down from €2,250 for renovations and €3,500 for household work, nursing, care and physical therapy in 2024.
The rates for calculating the credit will also be adjusted. If you hire a company, the credit will be 35% of the payment (down from 40% for renovations and 60% for household work in 2024). If you hire an employee, the credit will be 13% of their pay, along with any employer contributions (down from 15% in 2024).
Replacing oil heating still qualifies for a 60% household expense credit, up to €3,500 annually, available until 2027. The credit threshold will increase from the current €100 to €150.
Tax-Exempt Travel Expense Reimbursements
Verovapaat matkakustannusten korvaukset
Child increase to credit for work income
Työtulovähennykseen lapsikorotus
Parents or guardians of minor children will be eligible for a higher credit for work income. The maximum amount of this credit will be increased by €50 for each dependent underage child of the taxpayer. For single parents, the increase is doubled. The credit is available based on wages or other earned income. It is applied directly to reduce the tax liability: for instance, a €50 credit means €50 less in taxes owed.
Agricultural rental income
Maatalouden vuokratulot
Income from renting out land and forests will no longer be taxed under agricultural income. Depending on the landlord, rental income will be taxed either under the Income Tax Act (Tuloverolaki) as other income or under the Act on the Taxation of Business Income (Laki elinkeinotulon verottamisesta) as business income.
Social insurance contributions
Sosiaalivakuutusmaksut
The level of unemployment insurance contributions will decrease (Employment Fund press release, December 5, 2024) .
Earnings-related pension contributions will remain unchanged for employees (ETK, Finnish Centre for Pensions press release 8 October 2024).
Changes to social insurance contributions Vero.fi
Value added tax, VAT
Arvonlisävero
Starting January 1, 2025, products and services that are currently taxed at a 10% VAT rate will see an increase to a 14% VAT rate. This includes items such as books, medicines, sports and accommodation services, passenger transport, and tickets for cultural, sports, and entertainment events. However, newspapers, magazines, and public broadcasting will continue to be taxed at the reduced 10% rate.
Beginning on January 1, 2025, sanitary protection products, including menstrual pads and baby diapers, will see a reduction in VAT from the current 25.5% to 14%. Meanwhile, sweets and chocolate, which are currently taxed at 14%, will face an increase in VAT to 25.5%, effective from June 1, 2025.
Online VAT calculator. VAT rates in Finland
Starting January 1, 2025, the VAT registration threshold for businesses will rise from €15,000 to €20,000. Furthermore, turnover will be calculated using the calendar year's total, rather than the turnover for the accounting period.
Starting next year, the Finnish VAT relief (arvonlisäveron alarajahuojennus) for small businesses will be discontinued. However, businesses with a turnover of up to €30,000 in 2024 can still apply for the relief for that year.
A new VAT scheme for small businesses will be introduced in the EU, allowing Finnish companies to sell goods and services in other EU countries without VAT, and vice versa. The scheme applies to businesses with an annual turnover below €100,000 in the EU and whose sales do not exceed the small business turnover thresholds in the respective countries.
Excise duty on tobacco
Tupakkavero
Excise duties on tobacco will increase in phases between 2025 and 2027, with rate hikes effective from January and July each year. The average increase of the excise duty for cigarettes, roll-your-own tobacco, pipe and cigarette tobacco, and cigars and cigarillos will be 27.1%. However, excise duties on other tobacco products like e-cigarette liquids and nicotine pouches will remain unchanged. Tobacco taxes will be increased by a total of €150 million during the government's term.
Excise duty on alcohol
Alkoholivero
The tax levels for strong alcoholic beverages and so-called intermediate products (e.g. fortified wines) will be increased by €3 million in 2025. The increases will continue in 2026 and 2027.
Vehicle tax
Ajoneuvovero
Vehicle tax is required annually for passenger cars, vans, and trucks that are both registered and actively used in Finland. Paid in advance for 12 months, it’s the responsibility of the owner or holder, though anyone can pay. Traficom collects the tax.
NOTE: Vehicle tax and car tax are often confused, but they are distinct taxes. Car tax is different, paid once upon registration or commissioning. For imported cars, the Finnish Tax Administration handles it, and Traficom only collects the tax if the vehicle’s use or structure changes.
Vehicle taxes for fully electric cars, plug-in hybrids, and motorhomes will generally increase from the tax dates starting January 1, 2026. Since the tax period (typically 12 months) is paid in advance, the increased tax will begin to be collected in 2025.
Read more:
- Vehicle tax, Finnish Transport and Communications Agency Traficom
Employee benefits
Työsuhde-edut
The €170 monthly tax value reduction for zero-emission company cars (all-electric cars) will be extended until 2029.
The tax exemption for employer-paid relocation costs will be expanded.
Employers’ training tax deduction
Koulutusvähennys
The employers’ deduction for employees' training expenses, which allowed deductions from business and agricultural income, will be abolished starting in the 2025 tax year. Introduced in 2014, the deduction is being removed due to its failure to achieve the intended goals.
Fairway dues
Väylämaksu
Fairway dues, which were temporarily reduced by half in 2015, will be fully collected again starting in 2025. The fairway fee must be paid when ships engaged in merchant shipping enter Finland's territorial waters from abroad or when they travel between two Finnish ports.
Tax credit for large investments
Verohyvitys suurille investoinneille
Preparations for a tax credit aimed at large investments targeting a net-zero economy will continue as outlined in the government's framework. The tax credit is set to be implemented as soon as possible, by no later than January 1, 2025.
Published 28.12.2024, FINREPO
