Henkilöveron

Henkilöveron, or personal income tax, is the tax on individuals' income in Finland. It primarily applies to earned income such as wages and salaries, but income from pensions and certain other sources is also taxed under personal income tax. Capital income is taxed separately under capital income tax rules.

The tax consists mainly of municipal income tax, state income tax, and, for members of the church, church tax. Municipal income tax is set by each municipality and is applied uniformly to residents of that municipality. State income tax is progressive and applies to higher income levels, with different brackets and thresholds that can change yearly. Church tax is paid by members of the Evangelical Lutheran Church of Finland or the Orthodox Church and varies by church and municipality.

Taxable income is calculated by starting from gross income and applying deductions and credits. Common deductions include basic deduction and work-related deductions; credits reduce the final tax amount. The Tax Administration (Verohallinto) issues a verokortti (tax card) that determines the amount to be withheld from wages on a monthly basis. At the end of the year, residents file an annual tax return; Verohallinto calculates the final tax, which may result in a refund or additional payment.

Administration and features: Henkilövero is a major source of revenue for public services and is designed to be progressive, with the tax burden rising with income for earned income. Municipal tax rates are fixed by each municipality; state tax rates apply only above certain thresholds, and church tax is optional for members. Exact rates and thresholds are determined by law and can change from year to year.