The basic deduction 2026
The basic deduction (perusvähennys) makes very small incomes almost tax-free. How it is calculated, where it ends and who benefits most.
Checked by Radif Partners · Editorial policy · Calculation method
The basic deduction (perusvähennys) is worth up to €4,265 in 2026 and shrinks by 18% of any income above €4,265. It disappears completely at an income of about €27,959, which for an employee means a salary of roughly €31,600, since the work-expense deduction and employee contributions come off first. It is the last deduction taken from net earned income, and Vero’s own 2026 examples only match when it reduces taxable income for both municipal and state tax. Its weight is greatest at low incomes: on a €15,000 salary in Tampere it is €2,689, and together with the earned income credit it makes that pay tax-free. The same amount received as a benefit, which earns no earned income credit, still gets a €2,333 basic deduction yet is taxed €2,753. It applies to all earned income, including part-time work alongside studies and taxable Kela benefits. In Åland municipal taxation the deduction is €3,925 with a 8.4% taper. You never apply for it; Vero includes it in your tax card and your assessment automatically.
Basic deduction at your income
Basic deduction
€2,333
| Maximum | €4,265 |
| Ends at income | €27,959 |
| Left taxable | €12,667 |
The formula
One line does it: €4,265 minus 18% of whatever income exceeds €4,265. Income here means net earned income after the other deductions made from it, which for an employee are the pension, unemployment insurance and daily allowance contributions. Vero’s decision puts it plainly: the basic deduction is the last one taken from net earned income. It can never exceed the income it is deducted from, so on very small earnings nothing taxable is left.
Because it shrinks by 18 cents for every euro above the threshold, it acts as a hidden surcharge between €4,265 and €27,959: each extra euro you earn adds 1.18 euros to your taxable income until the deduction is used up.
Wages versus benefits
| Annual income | Deduction on wages | Tax on wages | Deduction on benefit | Tax on benefit |
|---|---|---|---|---|
| €6,000 | €4,176 | €0 | €3,953 | €445 |
| €10,000 | €3,515 | €0 | €3,233 | €1,471 |
| €15,000 | €2,689 | €0 | €2,333 | €2,753 |
| €20,000 | €1,894 | €279 | €1,433 | €4,156 |
| €25,000 | €1,076 | €1,411 | €533 | €5,634 |
| €30,000 | €257 | €2,872 | €0 | €7,188 |
Two things stand out. On wages the deduction is slightly larger than on the same benefit, because contributions and the work-expense deduction reduce the base first. Yet the benefit is taxed far more heavily, since benefits get no earned income tax credit. For anyone living on benefits, the basic deduction is effectively the only general relief, and it is what shapes the tax on general support (yleistuki).
Step by step: a €15,000 salary
A part-timer in Tampere earns €15,000 a year. The €750 work-expense deduction leaves net earned income of €14,250. The pension contribution (€1,095) and unemployment insurance (€134) come off next; there is no daily allowance contribution below €17,255 of wages. That leaves €13,022 as the base, so the deduction is €2,689 and taxable income €10,333. The tax on that is smaller than the earned income credit, and nothing is left to pay.
Where income tax actually starts
Between them, the basic deduction and the earned income credit decide the salary at which real income tax begins. In Tampere, municipal tax, state tax and the health care contribution start to show at about €20,500 a year. Below that, the only charges are the Yle tax and the daily allowance contribution once their thresholds are passed. From there up to about €31,600, each extra euro is taxed and also erodes the deduction, so the effective marginal rate is higher than the headline rates suggest.
Who it matters to
- Students and summer workers: small annual earnings end up almost untaxed; €18,000 of wages leaves just €211 of tax.
- Part-timers: on a €2,000 monthly salary some deduction is still left, and it pulls the rate down noticeably.
- Benefit recipients: unemployment allowance, parental allowance and other taxable benefits get the basic deduction but no earned income credit.
- People who arrive mid-year: the deduction is annual, so against a few months of Finnish salary it is relatively large.
For a full-time salary it is irrelevant: it runs out around €31,600 a year, well below typical professional pay.
Arriving in September on €3,500 a month gives €14,000 of Finnish pay for the year, a basic deduction of €2,854 and total tax of just €0, because the deduction is not prorated by month. The following year, on a full twelve months, the deduction is gone and the rate jumps; expect that on your January card.
On your tax card
There is nothing to claim. Vero builds the deduction into your card rate from your estimated income, and the final amount is set in the assessment from what you actually earned. Earn less than expected and the deduction grows, so some withholding comes back. Earn more and it shrinks, worth remembering if you move from a student job to full-time work during the year.
The Åland Islands
For Åland municipal tax the basic deduction is €3,925, reduced by 8.4% of income above it. The gentler taper means it lasts until about €50,651. In Mariehamn a €30,000 salary still carries a €2,026 municipal deduction, against €257 on the mainland. State tax in Åland uses the mainland deduction and a reduced state scale.
Sources: Finnish Tax Administration decision on the 2026 withholding calculation rules for wages (20 Nov 2025); Finlex: Income Tax Act 1535/1992 (section 125 earned income tax credit, amended 1141/2025).