How pensions are taxed in Finland
Pensions are taxed as earned income, but with their own deduction and contribution rules. Here is what that means for your monthly amount.
Checked by Radif Partners · Editorial policy · Calculation method
A pension of €2,000 a month in Helsinki, with no church membership, carries €296 of tax a month in 2026, leaving €1,704 net at a withholding rate of 15.0%. Finland taxes pensions as earned income, but three things differ from a salary. First, pensioners get the pension income deduction (eläketulovähennys) of up to €11,080 a year. It shrinks by 51% of net earned income above €11,080 and by 19.6% of income above €22,500, so it disappears at about €49,315. Second, there is no earned income tax credit and no pension, unemployment or daily allowance contribution on a pension, while the health care contribution is 1.49% rather than the 1.10% applied to wages. Third, pension income above €60,000 after the deduction carries a 5.85% surtax. Our engine reproduces all 8 official Vero examples to the cent.
Pension tax and net amount
Net pension per month
€1,704
| Withholding rate | 15.0 % |
| Pension income deduction per year | €4,962 |
| Tax per month | €296 |
The calculation, step by step
The order comes from Vero’s 2026 withholding decision for pensions and section 100 of the Income Tax Act:
- The year’s pension is net earned income as it stands; there is no work-expense deduction.
- Pension income deduction: €11,080, minus 51% of income above €11,080 and 19.6% above €22,500. One deduction serves both state and municipal tax.
- Basic deduction (perusvähennys) of €4,265, reduced by 18% of income above that amount, applied last. What remains is taxable for both state and municipality.
- State income tax on the progressive scale, municipal tax, church tax if you belong, and the 1.49% health care contribution.
- Yle tax and, for large pensions, the 5.85% surtax.
Each deduction is rounded to the cent before tax is applied, which is what makes the results match Vero’s published figures exactly.
Vero’s own examples, side by side
Vero publishes example tax amounts for a Helsinki resident who belongs to the Lutheran church and has only pension income. 8 of 8 rows match our engine to the cent.
| Annual pension | Tax per vero.fi | Tax per our engine | Pension income deduction | Withholding rate |
|---|---|---|---|---|
| €10,000 | €0.00 | €0.00 | €10,000.00 | 0.0% |
| €16,000 | €784.06 | €784.06 | €8,570.80 | 5.0% |
| €20,000 | €2,340.15 | €2,340.15 | €6,530.80 | 12.0% |
| €30,000 | €5,699.42 | €5,699.42 | €3,785.80 | 19.0% |
| €40,000 | €9,614.77 | €9,614.77 | €1,825.80 | 24.5% |
| €50,000 | €14,410.30 | €14,410.30 | €0.00 | 29.0% |
| €60,000 | €18,850.05 | €18,850.05 | €0.00 | 31.5% |
| €70,000 | €23,964.05 | €23,964.05 | €0.00 | 34.5% |
Where the deduction runs out
The deduction melts away in two phases. Between €11,080 and €22,500 each extra euro removes 51 cents of it; above that, 19.6 cents. At €22,500 exactly €5,255.80 is left; divide that by 19.6% and add it to the threshold to find the zero point, about €49,315 a year or €4,110 a month. That is well above the average pension, so most pensioners get at least part of the deduction.
| Annual pension | Deduction | Tax in Helsinki | Net per month |
|---|---|---|---|
| €10,000 | €10,000 | €0 | €833 |
| €15,000 | €9,081 | €379 | €1,218 |
| €20,000 | €6,531 | €2,232 | €1,481 |
| €22,500 | €5,256 | €3,136 | €1,614 |
| €30,000 | €3,786 | €5,440 | €2,047 |
| €40,000 | €1,826 | €9,233 | €2,564 |
That phase-out raises the marginal rate. At €30,000 a year, the next €100 of pension costs €36 in tax; at €45,000, €48. Worth knowing before you add part-time pay on top of a pension or defer to get a bigger one.
A €2,000 monthly pension, line by line
Here is a full year for one pensioner: €24,000 of pension, living in Helsinki, no church tax. The deductions cut taxable income by more than a quarter, and state income tax is still the largest single item.
| Item | Euros per year |
|---|---|
| Pension | €24,000 |
| Pension income deduction | €4,961.80 |
| Basic deduction | €1,605.82 |
| Taxable income | €17,432.38 |
| State income tax | €2,203.45 |
| Municipal tax | €923.92 |
| Health care contribution | €259.74 |
| Yle tax | €160.00 |
| Total tax | €3,547.11 |
Pension versus salary at the same gross
Employees pay pension, unemployment and daily allowance contributions that pensioners do not, but they also get the earned income tax credit and a lower health care contribution. Which side comes out ahead depends on income.
| Annual income | Pension: net | Salary: net | Difference |
|---|---|---|---|
| €18,000 | €16,511 | €16,315 | €196 |
| €24,000 | €20,453 | €21,317 | -€864 |
| €36,000 | €28,539 | €29,275 | -€736 |
A positive difference means the pensioner keeps more. At low incomes the large pension income deduction outweighs the employee’s credit; as it phases out, the balance swings towards the salary.
Your municipality still matters
The same €2,000 monthly pension nets €1,623 in Pomarkku and €1,713 in Kauniainen, because municipal tax runs from 4.70% to 10.90%. Compare all of them in the municipal tax table. The difference between wage and pension contributions is covered under health insurance contributions.
Small pensions
A full Kela national pension (kansaneläke) is €787.07 a month, €9,445 a year, well under the €13,910 tax-free threshold, so a small earnings-related pension combined with it often attracts no tax at all; see national and guarantee pension. The number to remember is the point where the pension income deduction hits zero, about €49,315 a year. Above it, a pension is taxed like a salary without the earned income credit. The pension calculator applies these rules to your whole pension.