palkkatulo

Palkkatulo, in Finnish tax terminology, refers to earned income from employment. It includes wages, salaries, bonuses, overtime pay, and taxable fringe benefits provided by an employer (such as a company car or housing). It is a key category of personal income and is distinguished from capital income (pääomatulo) and from entrepreneurial income.

Tax treatment and withholding: Palkkatulo is generally taxed at progressive income tax rates in Finland, encompassing municipal tax and, for higher earnings, state tax and possibly church tax. Employers typically withhold taxes at source based on the employee’s tax card. Social security contributions related to employment, such as pension and unemployment insurance, are also associated with palkkatulo and are reflected in the payroll.

Deductions and taxable base: The tax base for palkkatulo is determined after applying statutory deductions and credits to earned income. Typical deductions may include general or work-related deductions, which reduce the amount of taxable earned income. Some employer-provided benefits may be treated as part of palkkatulo, while others may be exempt or taxed separately within certain limits.

Relation to other income: Palkkatulo is contrasted with capital income (pääomatulo) from investments and with entrepreneurial income from self-employment. When individuals have mixed income, portions of earned income and capital income are taxed under the respective rules, and the totals influence overall tax liability and credits.

Use and relevance: The concept is routinely used in Finnish tax law and public administration to calculate taxes, determine eligibility for tax credits and social benefits, and compile annual income information for residents.