Ansiotulovero

Ansiotulovero is the Finnish earned income tax. It refers to the portion of income tax that is charged on wages and other earned income, as opposed to tax on capital income (pääomatulovero). The earned income tax is a progressive tax that is combined with municipal tax and, if applicable, church tax, to determine the total tax on earned income.

Calculation and scope: The rate and brackets for ansiottulovero are determined annually by the government and administered by the Finnish Tax Administration (Verohallinto). The exact amount of earned income tax depends on the level of earned income and the year’s tax brackets. The earned income tax is one part of the overall tax on wage income, and its impact is influenced by tax credits and deductions, including the basic deduction and earned income deduction, which reduce the gross tax payable.

Relation to other taxes: In addition to ansiotulovero, individuals pay municipal tax, which varies by municipality, and church tax if they are members of a church. Capital income is taxed separately at the capital income tax rate (pääomatulovero). The combined effect of these taxes funds public services and is assessed through the annual tax return process.

Purpose and administration: Ansiotulovero serves as a primary instrument of Finland’s state income tax on earned income. It is collected by the national tax administration alongside other taxes, and the resulting liability is settled after applying credits and deductions. The system is designed to be transparent and year-by-year adjustable through the annual tax schedule.