How does Finland payroll tax work in 2026?
The employer earnings-related pension (TyEL) alone costs 17.1% of wages in 2026. Add health, unemployment, accident, and group life insurance on top and the employer contribution stack climbs well past a fifth of payroll. Finland sets no statutory minimum wage, so the real floor comes from the sector collective agreement, not the law.
· Finland guide
Illustration · Helsinki, Finland
Finland employer payroll in 2026 is built around the TyEL pension. The employer pays 17.1% of wages on average. The employee pays 7.3%, so the combined TyEL contribution is 24.4%.
On top of pension the employer pays health insurance at 1.91%, unemployment insurance from 0.31%, accident insurance around 0.7%, and group life cover near 0.06%.
State income tax runs across five bands. It starts at 12.64% and rises to 37.5% on the highest pay. Municipal tax is then added on top, so the real marginal rate is higher.
Finland sets no minimum wage in law. Pay floors come from the sector collective agreement instead. There is no statutory 13th month either.
What does an employer pay in Finland payroll contributions?
The biggest employer cost is the TyEL pension at 17.1% of wages. Health insurance adds 1.91%.
Unemployment insurance starts at 0.31%. Accident cover averages 0.7%. Group life cover adds about 0.06% (TyEL 395/2006).
| Employer contribution | Rate | Applies to |
|---|---|---|
| Earnings-related pension (TyEL) | 17.1% | Gross wages, average rate |
| Health insurance | 1.91% | Gross wages |
| Unemployment insurance, lower band | 0.31% | Payroll up to 2,509,500 a year |
| Unemployment insurance, upper band | 1.23% | Payroll above 2,509,500 a year |
| Accident insurance | 0.7% | Gross wages, varies by risk class |
| Group life insurance | 0.06% | Gross wages, average rate |
TyEL pension is the heavyweight
TyEL is the mandatory earnings-related pension under the Employees Pensions Act 395/2006. The employer share averages 17.1% of wages in 2026, and the worker share is 7.3%, for a combined 24.4%. The exact employer rate varies a little by insurer and company size, which is why the headline figure is an average.
The smaller employer charges add up
Health insurance is 1.91% of wages in 2026, up from 1.87% the year before. Unemployment insurance is 0.31% on the part of total payroll up to 2,509,500 a year, then 1.23% above that. Statutory accident insurance averages 0.7% but is priced by the work-risk class, and group life cover adds roughly 0.06%. None of these is a flat number you can guess at, which is the trap when budgeting a Finland hire from the salary alone.
What comes out of a Finland employee's pay?
Before income tax, the employee pays TyEL pension at 7.3% and an unemployment contribution of 0.89%.
Health cover adds a medical-care part of 1.1% plus a daily-allowance part of 0.88% on higher salaries (Health Insurance Act 1224/2004).
| Employee deduction | Rate | Applies to |
|---|---|---|
| Earnings-related pension (TyEL) | 7.3% | Gross wages, standardised in 2026 |
| Unemployment insurance | 0.89% | Gross wages |
| Health insurance, medical care | 1.1% | Wage income |
| Health insurance, daily allowance | 0.88% | Annual salary at or above 17,255 |
The TyEL employee rate is now flat
In 2026 the worker TyEL share is 7.3% for everyone. That is a change: in 2025 the rate was age-banded, with older workers paying more. The single rate makes the payroll calculation simpler and slightly lifts take-home for staff over 53.
Health and unemployment come off too
The employee unemployment contribution is 0.89% of wages in 2026, up from 0.59% in 2025. Health insurance splits in two: a medical-care part of 1.1% on wage income, and a daily-allowance part of 0.88% that only applies once annual salary reaches 17,255. Below that salary the daily-allowance part is zero. These deductions reduce the pay that income tax is then charged on.
Finland state income tax bands for 2026
State income tax runs across five bands for 2026. The first band is 12.64% and the top band is 37.5%.
The 2026 scale was reformed and the top state rate was lowered. Municipal income tax is charged on top of these state rates (scale 1140/2025).
| Annual taxable income | State tax rate |
|---|---|
| 0 to 22,000 | 12.64% |
| 22,000 to 32,600 | 19.00% |
| 32,600 to 40,100 | 30.25% |
| 40,100 to 52,100 | 33.25% |
| Over 52,100 | 37.50% |
These are the 2026 state income tax rates only. Each band rate applies to the slice of income inside it, so a salary in the top band still pays 12.64% on the first 22,000 and so on up. The 2026 reform lowered the top state band to 37.5%.
State tax is not the whole picture
On top of the state scale, every employee pays a municipal income tax set by their home town, plus a church tax for members and a public broadcasting (Yle) tax of 2.5% on income over 15,150, capped at 160 a year. Once municipal tax is added, the combined top marginal rate on earned income reaches roughly 52%. Investment income is taxed separately: 30% up to 30,000 of capital income and 34% on the part above that.
Tax cards drive the withholding
Finland uses a withholding rate set on each employee's tax card (verokortti) from the Tax Administration. The employer applies the rate on the card rather than working bands by hand each month, so getting the right card on file before the first run is what keeps the deduction correct.
How does Finland payroll reporting and remittance work?
Employers report every payment to the national Incomes Register within five days of payday.
Withheld tax and the employer's health contribution are paid to the Tax Administration by the 12th of the following month. Pension, unemployment, and accident contributions go to the chosen insurers.
Employers withhold income tax using each employee's tax card and pay it, together with the employer health insurance contribution of 1.91%, to the Finnish Tax Administration by the 12th of the month after payday. Every wage payment is also reported to the Incomes Register within five days.
Source: vero.fi: Social insurance contributions for employers
Finland runs payroll on a monthly cycle. By law pay is due on the last day of the pay period, and at least twice a month if the pay basis is shorter than a week (Employment Contracts Act 55/2001). The reporting and payment chain has a few moving parts:
- Incomes Register report filed within five days of each payment, covering wages, benefits, and the contributions
- Withheld income tax and the employer health contribution of 1.91% paid to the Tax Administration by the 12th of the following month
- TyEL pension of 24.4% combined paid to the chosen pension insurer
- Unemployment and accident insurance paid to their respective insurers on the insurer's schedule
The contributions do not all go to one place, which is the part that surprises first-time employers. Income tax goes to the Tax Administration, but pension, unemployment, and accident cover each sit with separate insurers you have to set up before the first payroll can run.
-
Collect pay data
Gather salary, hours, taxable benefits, and the employee's current tax card before the run closes.
-
Apply the withholding
Deduct income tax at the rate on the tax card, then take the employee pension, unemployment, and health contributions.
-
Calculate employer contributions
Work out the employer pension, health, unemployment, accident, and group life insurance on top of the employee deductions.
-
Report to the Incomes Register
File the payment details to the national Incomes Register within five days of payday.
-
Pay tax and insurers
Pay withheld tax and the employer health contribution to the Tax Administration by the 12th, and pay the pension and other insurers on their schedule.
Pension and social insurance in the Finland payroll stack
TyEL is the mandatory earnings-related pension. The employer pays 17.1% on average and the employee pays 7.3%.
Together that is 24.4% of payroll, the single largest line in the Finland social stack (TyEL 395/2006).
TyEL is run by private pension insurers, not the state, and the employer must hold a TyEL policy before the first payroll. The split for 2026 is:
- Employer share of 17.1% of wages on average
- Employee share of 7.3%, now a single flat rate after the 2026 standardisation
- Combined 24.4% of payroll, deducted and remitted every month
Because the employee rate is no longer age-banded, older workers see slightly more take-home pay in 2026 than in 2025. The employer rate is an average, so the exact figure on your invoice depends on the insurer and the company's size.
No statutory minimum wage, no statutory 13th month
Finland has no minimum wage in law. The pay floor comes from the sector collective agreement (työehtosopimus) that applies to the role, set out on the official suomi.fi work-in-Finland guide. There is also no statutory 13th or 14th month salary. A holiday bonus (lomaraha), usually around half of holiday pay, is common but it comes from the collective agreement, not the law. Sunday and church-holiday work carries a 100% pay increase, known as double time.
How does Teamed handle Finland payroll for you?
Teamed becomes your legal employer of record in Finland for from $599 per employee per month, with zero FX mark-up in any currency.
Income tax, the TyEL pension, health, unemployment, and accident insurance run on one platform, reported to the Incomes Register on time.
Real HR and legal experts handle your Finland hires, from the first contract built to the right collective agreement through every monthly Incomes Register report and tax payment by the 12th. An actual person, not a chatbot or a pooled queue, sets up the TyEL pension policy and the insurers before your first run. There is no setup fee and no exit fee. Employer cost passes through at cost, itemised on every invoice, so you see TyEL, health, unemployment, and accident insurance as separate lines, never a blended number.
EOR payroll, contractor onboarding, and entity setup all live on one platform. A Finland contractor who converts to payroll keeps their record. That same employee can graduate from EOR to your own Finland entity without switching systems. Run the Employer Cost Calculator to see the full picture, including the employer pension and insurance stack on top of salary. EOR is the right model for a first Finland hire, until it isn't. Start from the Finland hiring overview.
Key sources: vero.fi employer contributions, ETK pension contributions, and the Employment Contracts Act 55/2001.
Frequently asked questions
What does an employer pay in Finland payroll contributions in 2026?
The largest employer contribution is the TyEL pension at 17.1% of wages on average. On top of that the employer pays health insurance at 1.91%, unemployment insurance from 0.31%, accident insurance averaging 0.7%, and group life insurance near 0.06%. The stack adds more than a fifth on top of gross salary.
What is deducted from a Finland employee's salary?
Before income tax, the employee pays the TyEL pension at 7.3% and an unemployment contribution of 0.89%. Health insurance adds a medical-care part of 1.1% plus a daily-allowance part of 0.88% once annual salary reaches 17,255. Income tax is then withheld at the rate on the employee's tax card.
What are the Finland state income tax bands for 2026?
The 2026 state income tax scale has five bands: 12.64% on income to 22,000; 19.00% from 22,000 to 32,600; 30.25% from 32,600 to 40,100; 33.25% from 40,100 to 52,100; and 37.50% above 52,100. Municipal income tax is charged on top, and the 2026 reform lowered the top state band.
Does Finland have a minimum wage?
No. Finland has no statutory minimum wage. The pay floor comes from the sector collective agreement (työehtosopimus) that applies to the role instead of from a national law. There is also no statutory 13th or 14th month salary, though a holiday bonus from the collective agreement is common.
When must Finland payroll taxes be reported and paid?
Every wage payment is reported to the national Incomes Register within five days of payday. Withheld income tax and the employer health insurance contribution of 1.91% are paid to the Finnish Tax Administration by the 12th of the following month. The TyEL pension of 24.4% combined, plus unemployment and accident insurance, are paid to the chosen insurers on their schedule.
The Finland payroll mistake we see most often is budgeting a hire from the salary alone. The employer pension and insurance stack adds more than a fifth on top, and accident insurance is priced by work-risk class, so the real cost is never the headline number. We model the full loaded cost before the offer goes out.
Finland payroll is salary plus a stack of insurers. TyEL pension leads it at 17.1% on the employer side alone.
There is no minimum wage in law here. The sector collective agreement sets the floor, and there is no statutory 13th month.
Model the loaded cost before you make the offer.
