The government announced nearly a billion euros in income tax cuts on Wednesday.
High earners will benefit the most, with a significant reduction in marginal tax rates for the highest income brackets. In total, they will receive tax cuts totalling 335 million euros.
Taxes for low- and middle-income earners will be reduced by 525 million euros next year, and by 650 million euros annually from 2027 onwards.
An estimate from the Taxpayers Association of Finland (TAF) shows how your taxes will change. The table below illustrates how much more you'll take home once the tax cuts are fully implemented.
The calculation considers both the reduction in marginal taxes and the income tax cuts for low- and middle-income earners. It also includes the 100-million-euro increase in the earned income deduction over the next two years, as outlined in the government programme.
In addition, the calculations account for the fact that the index adjustment for income tax will not be carried out in the highest income brackets.
The calculation does not take into account the removal of the tax deduction for trade union membership fees, nor the elimination of the tax exemptions for home office and work-related bicycle benefits.
High earners cash in
The largest reduction in marginal tax rates goes to those earning 100,000 euros or more annually, a group of around 120,000 to 130,000 people.
Their marginal tax rate will drop from about 59 percent to 52 percent, meaning they will pay approximately 600 euros less in taxes annually, according to the calculations by TAF.
For individuals earning significantly more than 100,000 euros annually, the tax relief will be even greater. For example, someone with a 250,000 euro salary will see a tax reduction of around 9,250 euros per year, based on TAF's estimates.
Many high earners also directly benefit from the reduction in corporate tax rates. This lowers dividend taxation, which directly benefits entrepreneurs and business owners.
The tax cut will only slightly affect those earning 58,000 euros or more annually, reducing their marginal tax rate by 0.2 percentage points from 52.2 percent to 52 percent. This group includes individuals making about 4,600 euros per month.
The government's aim is to stimulate economic growth through wage and corporate tax cuts.
However, researchers interviewed by Yle caution that a significant portion of these tax cuts are unlikely to have substantial growth effects, based on existing studies.
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