Taxation of the child home care allowance

The child home care allowance is a taxable benefit. Even though the allowance will be less than your salary, your tax percentage may not necessarily be lower. The reason for this is that it is not possible to make the same tax deductions from the allowance as from the salary.

Amount of tax payable

The withholding tax rate is usually the same as the rate you pay on your salary. If your tax percentage is less than 25, the child home care allowance will still be taxed at a minimum rate of 25 percent unless you get a revised tax card for the allowance. If you also receive wages or some other taxable benefit, such as parental allowance, the child home care allowance is taxed according to the additional rate, unless you apply for a revised tax card for the allowance.

Tax card

It is usually not necessary to send the tax card to Kela. Kela gets basic tax card details directly from the Tax Administration.

If you have a tax-at-source card you must send it to Kela yourself. Tax-at-source cards are used by persons who live abroad or who move to Finland from another country.

The previous year's tax card is used in January unless you provide a revised tax card to Kela.

When to ask for a revised tax card

If you think that you may be paying too little or too much tax on your allowance, use this calculator to check your tax rate. With a revised tax card, the withholding rate can be less than 25.

If necessary, you can apply for a revised tax card. The Tax Administration will send the revised tax card directly to Kela at your request. Note that the revised tax card must be issued for the benefit and not for your salary.