Taxation of parental allowance
Parental allowance is taxable income by virtue of Finnish tax legislation. Although the allowance is smaller than the wages, the withholding rate will not necessarily be reduced because it is not possible to make the same tax deductions on the allowance as on earned income.
It is not necessary to forward your tax card to Kela. Kela will obtain the information on withholding tax for basic tax cards directly from the Tax Administration. The withholding rate for 2012 was taken into use on 1 February 2012.
Amount of withholding rate
The withholding rate of parental allowance is usually the tax rate of wages added by 2 percentage units (with the exception of partial parental allowance).
If the withholding rate of your wages is under 20%, the withholding rate of the parental allowance will be at least 20%. If you receive parental allowance at the minimum rate, the withholding rate will be 20%. If you are in paid employment and you receive maternal or parental allowance at the same time, the allowance is paid at the minimum rate and the withholding rate is 40%.
Revised tax card
If the withholding rate on the allowance seems too low or high, you can check your withholding rate with the tax percentage calculator on the Finnish Tax Administration's website. The withholding rate on a revised tax card may be under 20%. You can request a revised tax card at www.vero.fi/taxcard. The Finnish Tax Administration will send the revised tax card directly to Kela on request.
If you are using a tax-at-source card, please send it to Kela yourself. Tax-at-source cards are used by people living or moving from abroad.
Tax card with income scales
If you are using a tax-at-source card or a tax card with income scales, please send it to Kela.
Further information about taxation of families with children is available on the Finnish Tax Administration's website.