The Finnish government has decided to reduce income tax by approximately one billion euros and lower the corporate tax rate to 18%. These decisions were made during the government's mid-term review.
To finance these tax cuts, the government will make reductions in state administration, municipal state contributions, and development cooperation. Funding for development cooperation will be reduced by 50 million euros.
Other changes include the removal of tax benefits for home office deductions and commuter bicycles. Taxes on soft drinks, alcohol, nicotine pouches, and mining mineral taxes will be increased.
Prime Minister Petteri Orpo stated that the aim is to encourage more work and strengthen the purchasing power of Finnish citizens. He also promised that the corporate tax cut would improve the competitiveness of Finnish companies and encourage investment in Finland.
Finance Minister Riikka Purra announced a reduction of the 14 percent value-added tax rate by 0.5 percentage points. The right to deduct trade union membership fees will be removed for both employee and employer organizations.
The government also decided to reduce the basic funding for higher education by 30 million euros in 2026, 20 million in 2027, and 15 million from 2028 onwards. Tuition fees will be introduced for students from outside the EU and EEA countries in vocational and upper secondary education.
The lower limit for inheritance tax will be raised from 20,000 euros to 30,000 euros, and the lower limit for gift tax will be raised from 5,000 euros to 7,500 euros in 2026. The total impact is estimated at 67 million euros.