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Taxation of rehabilitation allowance
The rehabilitation allowance is taxable income.
Amount of tax payable
The rehabilitation allowance is usually taxed at the rate indicated on the standard tax card, i.e., the rate for salary payments.
Rehabilitation allowances paid to pensioners are always taxed at the rate of 40%.
Kela is informed directly by the Tax Administration of the details on your standard tax card, which is intended to be used with salary payments.
The minimum withholding rate used with a standard tax card is 25%, even if the rate indicated on the card is lower.
However, 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
Kela gets the revised tax card directly from the Tax Administration. You need not send it to Kela yourself.
Also the information on the revised tax card is sent to Kela directly from the Tax Administration.