ansiotuloverovähennys

Ansiotuloverovähennys, often translated as earned income tax reduction, is a Finnish tax credit designed to support low-income earners. It is a part of the Finnish income tax system and aims to improve the financial situation of individuals who receive a significant portion of their income from employment or entrepreneurial activity. The reduction is calculated based on the amount of earned income received during the tax year.

The purpose of the Ansiotuloverovähennys is to alleviate the tax burden on those with lower earnings, thereby making work more financially rewarding. It functions by reducing the amount of income tax payable. The specific amount of the reduction is not a fixed sum but rather a progressive calculation that considers the individual's income level. Generally, the reduction is higher for those with lower earned incomes and decreases as income increases, eventually phasing out altogether above a certain income threshold.

Eligibility for the Ansiotuloverovähennys is primarily determined by the source and amount of income. It is applicable to income derived from employment, self-employment, and other similar forms of earned income. Income from capital, such as interest or dividends, does not qualify for this reduction. The Finnish Tax Administration (Verohallinto) automatically considers the Ansiotuloverovähennys when assessing an individual's income tax, meaning taxpayers typically do not need to apply for it separately. The exact rules and calculation methods can be updated periodically by the Finnish government.