Finland income tax 2026 changes mean most wage earners will see lower income taxes next year, but the benefit is expected to shrink because of a planned rise in unemployment insurance contributions.
According to new calculations from the Finnish Taxpayers Association, a worker earning 2,000 euros per month, or about 25,000 euros per year, will actually face a 30 euro increase in their annual tax burden. For many in low to middle-income brackets, the upcoming tax cuts will be cancelled out by higher deductions and rising contributions.
The Employment Fund board has proposed raising unemployment insurance contributions by 0.6 percentage points in 2026. If approved, the average employer contribution would climb to 0.92 percent of salary, while the employee share would increase to 0.89 percent.
At present, employees pay 0.59 percent and employers pay 0.2 percent on annual salaries up to 2.5 million euros, with 0.8 percent charged on income above that level. Under the new structure, these would change to 0.31 percent and 1.23 percent.
The rise is aimed at covering growing unemployment benefits as Finland’s job market continues to struggle and economic forecasts remain weak.
Based on the Employment Fund’s estimates, a worker earning 4,000 euros per month will see their unemployment insurance payment rise by 144 euros per year, up from around 283 euros now.
Despite the higher contributions, most income groups are still expected to experience a net decrease in taxes. Someone earning 3,000 euros a month will pay roughly 200 euros less in income taxes compared to this year. However, the impact is smaller for those with annual salaries between 40,000 and 75,000 euros.
The biggest winners are high earners. Those with annual income above 100,000 euros will save about 200 euros more in tax, and individuals earning up to 250,000 euros could see reductions as high as 8,500 euros.
The government has put forward a plan to reduce the top marginal income tax rate to about 52 percent. It also intends to skip index adjustments for high earners, which further strengthens their tax advantage.
The Finnish Taxpayers Association noted that the government’s 100 million euro increase in the earned income deduction is included in its calculations. However, the review does not account for changes linked to union fees, workspace allowances, or the removal of the tax exemption on employer-provided bicycles.
Chief economist Mikael Kirkko-Jaakkola said the reforms amount to a broad-based reduction in tax burden, but warned that higher unemployment insurance payments will significantly cut into, or in some cases completely cancel out, the benefits.
Prime Minister Petteri Orpo defended the proposed 0.6 point increase, calling it moderate and consistent with earlier government appeals to avoid sharp rises that could erase the intended tax relief. He told Yle that the proposal “leans toward the lower end” of earlier forecasts, which suggested an increase of between 0.5 and 1.5 points.
Opposition leader Antti Lindtman, chair of the Social Democratic Party, criticised Orpo’s earlier appeals to the Employment Fund as inappropriate political interference and said he would monitor the proposal closely.
The Employment Fund’s proposal has now gone to its supervisory board, which will issue a recommendation to the Ministry of Social Affairs and Health. Parliament will make the final decision on contribution levels in the autumn.
