Taxation of benefits

You do not have to hand in your tax card to Kela because Kela gets the necessary tax withholding details directly from the Tax Administration. In terms of tax withholding, the changeover to the new tax year occurs at the beginning of February.

If the withholding rate for your benefit seems too low or too high, you can check the rate using a calculator at vero.fi.

If there is a change in your income, go to MyTax to request a revised tax card for benefits (vero.fi). The Tax Administration will send the revised tax card directly to Kela at your request. Note that there are different tax cards for social security benefits and wages.

You can also call us and ask us to apply a higher withholding rate than that set by the Tax Administration. For that, you do not need a revised tax card.

Benefits are taxed as determined in the tax legislation. Even if the benefits are lower than the wage, the rate of tax may not necessarily be lower. The reason for this is that it is not possible to make the same tax deductions from the benefits as from the salary.

Examples of tax rates on various benefits:

• The labour market subsidy and the basic unemployment allowance are usually taxed at 20 per cent.
• Daily allowances, including allowances for parents and the sickness allowance, are usually taxed at the rate applicable to the recipient’s salary. If salary is taxed at 25% or less, the tax rate on the sickness allowance is 25%, except if the customer applies for a revised tax card.
• Study grant payments are usually not taxed. Students who receive study grant and who also have taxable income from other sources, should order a new tax card for wages. For more information, see Taxation of the study grant.

Excess amounts of preliminary taxes that have been withheld can be refunded to the customer, if the customer sends a revised tax card with retroactive effect to Kela. The percentage on your revised tax card must also be lower than the percentage used thus far.

As regards pension benefits, Kela automatically corrects the preliminary tax withholding retroactively when the revised tax card has arrived at Kela. As regards other benefits, the customer must also request that Kela corrects the preliminary tax withholding.

Excess amounts of preliminary tax withholding can only be refunded during the year that tax is paid. If the payment date for the repayment of preliminary tax withholding is delayed to the next year, the excess amount of preliminary tax withholding can no longer be repaid.