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The taxation of earnings-related daily allowance is done according to the instructions of the tax authorities.
Even if your earnings-related daily allowance is lower than the wages you previously received, your tax rate is not necessarily lower. This is because earnings-related daily allowance cannot be subject to the same tax deductions as earned income.
The Tax Administration has decided that if tax is withheld from earnings-related daily allowance according to the withholding rate and additional percentage determined for earned income, the withholding rate is always at least 25 %.
Revised tax card for earnings-related daily allowance
When you apply for earnings-related daily allowance, you should order a new tax card. This way, you make sure that the taxation of your earnings-related daily allowance is correct from the start.
You can order a revised tax card in the Tax Administration’s online service. In the section for benefits, indicate how much earnings-related daily allowance you expect to receive.
You can see the amount of your daily allowance in the decision you have received from us. You can find this decision in the OmaYTK service. You can also use our daily allowance calculator to estimate the amount.
Multiply the daily allowance for a single day by 258 to get an estimate of the unemployment allowances to be paid during the entire year. You can use this estimate when ordering a new tax card.
In the same field where you entered the estimated amount of your allowance, you can enter “YTK Työttömyyskassa” as the recipient of your tax information. This way, we will get your tax information directly from the Tax Administration. If you are about to apply for daily allowance, please wait for a day or two before submitting your daily allowance application after ordering a new tax card. Otherwise, we might pay your daily allowance according to your old tax information.
You can also send your tax card to us in the OmaYTK online service. The service has a tax card button for adding a new tax card.
If you do not provide us with a tax card, we will use the tax information we receive from the tax authorities. The withholding rate we receive from the tax authorities has been calculated based on your wage income. When a tax card for wage income is used to pay earnings-related daily allowance, the withholding rate must always be at least 25% according to the Tax Administration’s instructions. In other words, if the tax rate on your wage income is less than 25%, we automatically increase it to 25%.
Because of this, your tax card may show a different tax rate than the one we apply to your earnings-related daily allowance. This is not a mistake, but is in accordance with the Tax Administration’s instructions for situations where earnings-related daily allowance is paid using a tax card issued for wage income.
Tax card income ceiling
If your tax card has an income ceiling, you should check it by the end of the year at the latest. If the income ceiling is exceeded, we need to use a higher withholding tax rate, which reduces the share of earnings-related daily allowance paid to you. This can come as an unpleasant surprise ahead of the holiday season. Remember to check your situation with the Tax Administration.
The Tax Administration sets the withholding tax rate
The Tax Administration calculates the withholding tax rate based on the information you have provided. If you have questions about the amount of withholding tax and the factors affecting it, contact the Tax Administration.
