Differences in municipal taxation impact wage earners significantly in Finland

Differences in municipal taxation in Finland can lead to significant variances in income for wage earners. For example, an employee earning €3,200 monthly pays a substantial amount in taxes, amounting to €3,904.60 annually, if they reside in Pomarkku, which has the highest tax rate in the country. In contrast, a resident of Kauniainen, which features the lowest tax rate in mainland Finland, pays only €1,683.63 in annual taxes.

The municipal tax information for all municipalities in mainland Finland can be accessed via an online tool, allowing individuals to see their projected municipal tax for the upcoming year and how different locations might affect their disposable income. This tool primarily provides calculations for full-time wage earners and does not apply to pensioners or students.

Kauniainen, despite raising its income tax rate to a historic 4.7% for next year, will maintain its position as the municipality with the lightest tax burden. Conversely, Pomarkku, with a municipal tax rate of 10.9%, will take over the title from Halsua, which had held it for five years.

Though there were fears of widespread tax increases due to a tight economic situation, only 20% of municipalities are set to raise their rates, with most remaining unchanged. In total, 66 municipalities will increase their rates, impacting over a million residents.

Looking ahead, changes in taxation for the year include the removal of the earned income deduction, while the work income deduction will increase. Moderate adjustments are anticipated across various income ranges, resulting in differing impacts depending on the municipality’s tax rate. Additional modifications to social insurance contributions and tax credits are also under consideration.