työtulovähennyksen

Työtulovähennys is a tax deduction in Finland that reduces an individual's income tax liability based on their earned income. Its primary purpose is to encourage employment and make working more financially attractive, particularly for those with lower incomes. The deduction is calculated automatically by the Finnish Tax Administration (Verohallinto) based on the income data reported by employers.

The amount of työtulovähennys is dependent on the amount of earned income received. Generally, the deduction increases with earned income up to a certain point, after which it may stabilize or begin to decrease. There are also maximum limits to the deduction. Certain types of income, such as capital income or social security benefits, are not eligible for this deduction.

The työtulovähennys is applied to the taxable income of an individual. This means it directly lowers the amount of income on which income tax is calculated, thus reducing the final tax bill. It is a progressive mechanism, meaning it provides a greater benefit to those earning less, thereby acting as a form of in-work tax credit. The specifics of the calculation and the thresholds are subject to change annually as part of the government's budget and tax legislation. Individuals do not typically need to apply for this deduction; it is automatically considered during the tax assessment process.