Earned income tax credit 2026
The earned income tax credit (työtulovähennys) cuts an employee’s tax bill euro for euro. How it is calculated and who gets more.
Checked by Radif Partners · Editorial policy · Calculation method
The earned income tax credit (työtulovähennys) is 18% of your wages and other work income in 2026, capped at €3,430, and it comes off your tax rather than your income. You reach the full amount at a salary of about €19,056. Once net earned income passes €35,000, the credit shrinks by 2% of the excess, but the taper stops at €50,550, so even the highest earners keep €3,119. The cap rises by €105 for each child under 18 in your custody at the end of the year, doubled for a sole guardian, and by €1,200 if you turned 65 before the tax year began. The credit is set against state income tax first; anything left over reduces municipal tax, the health care contribution and church tax in proportion. In Helsinki, a €42,000 salary gives a credit of €3,305, or €3,515 with two children. Vero builds it into your tax card rate automatically, so you see it in every payslip rather than as a refund.
Your earned income tax credit 2026
Earned income credit
€3,305
| Your maximum | €3,430 |
| Reduction | €125 |
| Per month | €275 |
Rate, cap, taper
Finland’s earned income credit works in three steps. Take 18% of your gross work income. Limit the result to the maximum, €3,430 plus any child or age top-up. Then subtract 2% of the part of your net earned income between €35,000 and €50,550. The first step uses gross pay, the taper uses net earned income, meaning after the work-expense deduction and similar deductions.
| Annual salary | No children | Two children | Two children, sole guardian | Aged 65+ |
|---|---|---|---|---|
| €10,000 | €1,800 | €1,800 | €1,800 | €1,800 |
| €20,000 | €3,430 | €3,600 | €3,600 | €3,600 |
| €30,000 | €3,430 | €3,640 | €3,850 | €4,630 |
| €45,000 | €3,245 | €3,455 | €3,665 | €4,445 |
| €60,000 | €3,119 | €3,329 | €3,539 | €4,319 |
At the lowest salary every column matches: 18% of pay is below all the caps, so the top-ups only help once income is large enough to fill them.
A taper with an end point
Under the 2026 rules the taper has a ceiling. Between €35,000 and €50,550 of net earned income each extra euro costs 2 cents of credit; above that range nothing more is lost. The maximum reduction is €311, leaving €3,119 for high earners without top-ups. Child and age top-ups are added to the cap before the taper, so they survive in full at any income.
Inside the taper band the credit behaves like an extra 2-point tax on each raise. Combined with the state income tax scale, it explains why middle earners keep less of a raise than the bracket rate suggests.
You feel the taper when you get a raise. Going from €40,000 to €45,000 in Helsinki trims the credit from €3,345 to €3,245, so €100 of the raise is lost before any bracket rate is applied.
Which taxes it reduces
The credit is deducted before any other tax credits and goes against state income tax first. If state tax runs out, the rest is taken off municipal tax, the health care contribution and church tax in proportion to each. It never touches the Yle tax or the daily allowance contribution. On €20,000 in Helsinki, scale tax is €1,964; the €3,430 credit wipes it out and the municipal tax and health care contribution with it. What remains is the Yle tax of €103 and the daily allowance contribution of €176.
That is why a low earner’s card rate sits near zero while the additional rate is high: once income outgrows the credit, each extra euro is taxed in full. The basic deduction fades out over a similar range, which sharpens the effect.
Who qualifies
- Employees, and people paid fees for work, royalties or dividends taxed as earned income.
- Entrepreneurs on the earned-income share of business profits, and partners in a partnership likewise.
- Not benefits or pensions: unemployment allowance, parental allowance and pensions do not build up the credit.
The age top-up applies if you turned 65 before the tax year started, which for 2026 means born in 1960 or earlier. A working pensioner gets it on wages, though not on the pension itself.
Both parents, and summer jobs
The child top-up is not split between parents. Every person who is a guardian at the end of the year gets it on their own credit, provided their work income is large enough to fill it. On a €6,000 summer job the credit is €1,080, and with the basic deduction it brings income tax down to €0. Pension and unemployment insurance contributions are still deducted, since they are not taxes.
On your tax card and payslip
Because Vero builds the credit into your withholding rate, it reaches you monthly rather than as a lump sum. On €42,000 with no children it is €3,305, roughly €275 a month. A parent of two on the same pay owes €210 less tax for the year. Try your own figures in the mini calculator above, or see a full payslip on net salary on €4,000.
To see what the credit is worth, remove it: on €42,000 the tax bill would be €3,305 higher and the card rate about 7.9 points steeper. It is also why a benefit and a salary of the same size are taxed differently. Benefits earn no credit but still count in the net earned income that drives the taper, so a benefit received alongside wages can shrink the credit without adding to it.
Sources: Finlex: Income Tax Act 1535/1992 (section 125 earned income tax credit, amended 1141/2025); Finnish Tax Administration decision on the 2026 withholding calculation rules for wages (20 Nov 2025).