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Why is Finland’s tax rate so high?

For those thinking of moving to Finland, the idea of a high tax rate might initially sound like a huge negative. But to really understand it, you will have to know a bit more than just that on average the rate is higher than in many other countries.

When I looked online, I noticed few good sources for straighforward information on this topic. So I thought I would write an article that will get you started and answer some of the most important questions like is the Finnish tax rate high and why?

Is Finland’s tax rate exceptionally high?

Let’s start with the facts about how much tax people pay on average in Finland. First of all, the taxation on earned income in Finland is progressive, so the more you earn, the bigger the proportion of tax you pay.

The easiest way to see what that might mean for you specifically is to use a Finnish tax calculator.

The tax calculator will also take into account where you live and any tax paid to the church and the Social Insurance Institution Kela. So it will be a comprehensive estimate of what you might actually pay if you know your salary.

Calculating taxes

According to the Organization for Economic Cooperation and Development’s figures, on average, the taxes are 42.7% in Finland, compared to 24.3% in the US. Other websites cite Finland as one of the top countries for highest personal income taxation, together with countries like Sweden.

In an article called High taxes, higher rewards: How Finland ensures a high quality of life Aalto University’s Professor Timo Viherkenttä says: “The marginal tax rate in Finland is on the high side, while the average tax rate is much lower. These are two different concepts that are often confused.”

Essentially it means the amount of additional tax paid for every additional euro you earn as income is higher in Finland, so you reach higher tax rates at lower levels of income than in some other countries. The difference in what people pay on average is not as great.

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Finland’s corporate and property tax rates

Something to keep in mind is that in addition to tax on earned income, each country also taxes other things. The VAT in Finland stands at 24% for most products and services and is built into the price of everything you buy.

Resident companies in Finland pay a corporate tax of 20% on their income. Another thing to consider is the property tax or the real estate tax rate , which is low compared to the US. First-time home buyers are exempt from paying it.


So if you want to understand the full picture of how your taxation might change or be calculated in Finland, there is more to consider than just the tax on earned income. The different calculators and verohallinto (tax administration) website can be a good place to start.

Why is the tax rate high: Finland’s taxes and benefits

So why is the income tax rate in Finland generally higher than in some other countries? Just like the other nordic countries at the top of those lists, Finland offers residents and citizens many benefits and services.

Free healthcare and education

“In Finland, there’s always been heavy discussion around how to improve our healthcare and education systems – we prioritize these key initiatives so they’re not left behind”, professor Viherkenttä explains.

The benefits you get for a higher tax rate are an affordable healthcare system that aims to guarantee everyone access to good quality healthcare even without insurance.

Aalto University offers this example of what that means in practice: “For example, seeing a specialist in cardiology for a 45-minute appointment will cost you about €30. And with a yearly payment ceiling, you won’t pay more than €683 per year for any specialized treatments, hospital visits, or surgeries.”

Taxes and benefits

We also have a world-class education system that aims to provide each child with the same opportunities regardless of their background and, of course, all of the infrastructure and administration needed to keep things running everywhere.

The Finnish system is built on the foundation that everyone has opportunities available and that putting money towards things like healthcare and education benefits everyone. So even University studies in Finland are free, provided you pass an entrance examination or have high enough grades to be selected.


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Help through difficult times and a mandatory pension contribution

Tax money is also used to make sure no one is left behind through social security like unemployment benefits, housing benefits, student loans, and pensions. Finland’s system aims to guarantee everyone has a place to live and access to healthcare services and supports families, the elderly as well as vulnerable groups of people like those unable to work full time.


During your working life, you also pay a mandatory pension contribution that will eventually fund your retirement. Your salary determines the percentage paid, and through that the amount of money you receive when you retire.

Higher taxes: more services and benefits

In a nutshell, the higher tax rate in Finland guarantees services and benefits that are usually not available for free. We tend to think it increases equality and supports those who are more vulnerable or have a more difficult start in life.


One of the things you will find in Finland is also a very open and always evolving conversation on what should be funded with tax money and whether the rates should go up or down. It is important that the use of the money is very transparent and it is well and professionally managed.

Do you have any other questions about taxation in Finland that I might be able to answer or find resources on? Leave a comment and I will try my best to reply or add the information to this article!

You might also enjoy these articles on Finland:

Is it expensive to live in Finland? 5 examples of cost of living in Finland (family, single person…)

5 Odd Things about Finnish People and Money

10 Must-Know Tips about Tipping in Finland for Travelers

How to Network in Finland

Moving to Finland: Living in the 20 Largest Cities

About Varpu
I’m the founder of Her Finland. I love cultural tidbits, aha moments, Finnish folklore, and cinnamon buns. My newest interest is learning bird songs. Read more about me..

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Kay Lamberson

Tuesday 6th of June 2023

How is crime in Finland?

Andrey Zh.

Thursday 15th of December 2022

Taxes wasn't a problem when you're earning average income, around 50K per year. Once you finally sweat and loose years of your life to get a high paying job - this is when it hits you.

The progressive tax on an income over 50K is just mind-numbing. I look at my tax statement for this year and I see that all-in-all government and municipality received about a HALF of what I earned. In addition to that they get nearly a quarter from every purchase as VAT.

Gross? Gross indeed.

As for the services.. They aren't bad, not I've seen better services at other countries with lower tax rates. Education is great and I'm very grateful for my university years, but I think I've paid by debt in taxes already. Public transport is not too bad either, but it's also pretty expensive. So in terms of value for money not something exceptional either. Roads? Deteriorating. Public sector healthcare? Very good if you're about to die, but a joke for the day-to-day services. Thank God and my employer for private healthcare.

There's hardly any motivation to earn more and make yourself more valuable specialist because half of your income or more will end up in the government's hands. If you don't like it, why don't you move away you'll ask? Valid question, lately I've been considering it indeed.


Monday 19th of December 2022

Hi Andrey, great points! Thank you so much for your valuable comment! I agree with so many points you wrote. Indeed, the taxes are high if you have a high-paying job. Health-care could be improved a lot for day-to-day services. And when it comes to the big picture, I'm worried about our state taking so much debt. It feels that specialists are not staying in Finland because of great salaries but because of a healthy approach to free time and vacations with a demanding job. The work-life balance is quite good in Finland. Also, if you have children, then the benefits of the system are great. All in all, it depends on what one wants in life and what's the situation. For some, it definitely makes sense to move away. Kiitos again for your comment!


Monday 17th of October 2022

Too bad the American wealthy people and business leaders don't understand how high taxes on them will help the rest of the population. When America's tax rate on wealthy people and corporations was at 91%, you didn't see the wealthy people go homeless nor did they leave the country. You also did not see American corporations going out of business and /or leaving the country either. The country actually thrives and the economy grew; yet, the American business leaders and wealthy people don't want to admit it. Instead, they are always blaming high taxes, labor unions, labor costs, and government regulations for not letting them have higher and higher profits every year and killing American corporations. The reality is that they have never had it so good for the last 42 years and they are the ones that have been destroying their own businesses, causing economic havoc through their own corporate white collar crimes and getting away with it because they have the government under their control.

How do you deal with economic crimes being committed by your own wealthy people and business leaders in Finland and by wealthy people and other business people from foreign countries?



Saturday 22nd of October 2022

Hei Gunther, thank you so much for your question. I'll search if I can find any studies made about this. Just wanted to write you this so you'll know I'm looking into it!

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