Veropalkki

Veropalkki is a Finnish term that translates to "tax on salary" or "salary tax." It refers to the portion of an individual's gross salary that is subject to income tax. In Finland, income tax is progressive, meaning that the tax rate increases with income. Veropalkki is a crucial concept for understanding how much net income an employee will receive after taxes.

The calculation of veropalkki involves several factors. It is based on the gross salary, but certain deductions are allowed. These can include expenses related to work, such as travel costs or union fees, and other permissible deductions that reduce the taxable income. The specific tax rate applied to the veropalkki depends on the individual's total income, municipality of residence, and membership in the Evangelical Lutheran or Orthodox church, which levies a separate church tax.

Finnish employers are responsible for withholding the veropalkki from each employee's salary and remitting it to the tax authorities. Employees receive a tax card from the Finnish Tax Administration (Verohallinto) that indicates the percentage of their income to be withheld. This system aims to ensure that taxes are paid throughout the year rather than as a large lump sum. It is possible for individuals to request a revised tax card if their income or deductions change significantly during the year. The concept of veropalkki is fundamental to the Finnish income tax system and impacts the take-home pay of all employed individuals.