Special tax deduction for a reduced capacity to pay taxes
You can claim a special deduction for a reduced capacity to pay taxes because of an illness, because of unemployment or a child-maintenance obligation, etc. The deduction is granted only after an appraisal process of your circumstances.
The total income of all family members affects the deduction
Whether or not the special deduction can be given to you depends on
- how much annual income you receive – including any tax-exempt income
- how much income and property the other members of your family receive or have (your spouse’s and your children’s income and wealth).
For the above reasons, the special deduction cannot be included in your tax-card calculation so that it would reduce your withholding rate.
Please note that in general, the special deduction for reduced capacity to pay taxes cannot be given in full to an individual taxpayer, if he or she alone has an annual income above €17,500 or if a married couple’s (or a couple’s living together in other partnership) combined annual income is above €26,500. The deduction cannot even partially be given to an individual taxpayer if he or she alone has an annual income above €27,000 or to a couple, if their combined annual income is above €40,000. However, you can add €2,500 to the above thresholds of annual gross income for every child that you have in your care and custody.
If an individual taxpayer’s annual gross income goes over the threshold for one person, or if the taxpayer’s and spouse’s income goes over the threshold for a couple (€27,000/€40,000), every decision whether to give the special deduction due to health and medical expenses is made separately.
Reduced capacity to pay taxes because of medical expenses
High health and medical expenses qualify for the special deduction, based on a standard formula, under the following two conditions:
- Annual expenses reach €700 for the taxpayer and family, and
- They also reach 10% of the annual adjusted gross income (including both earned and capital income, net of any deductions for the production of income).
Even if you satisfy both of the 2 requirements above (€700 and 10%), the decision whether to give the special deduction to you is always based on an evaluation of your and your family’s disposable income and the property and assets that you own.
This also means that medical expenses cannot be regarded as a tax-deductible cost item that would automatically entitle the taxpayer to deductions. The amount that can be deducted is the result of standard calculations by formula, and both the size of the medical expenses and the amounts of annual gross income are accounted for. Keep the receipts for the medical expenses you have paid. Do not enclose them with your tax return. If it turns out to be necessary, the Tax Administration will ask you to show the receipts later.
How much can be deducted?
The maximum deduction is €1,400.
For more information, see instructions and a formula-based calculation table for claiming medical expenses (in Finnish and Swedish, link to Finnish).
How to claim
You can apply for the special deduction for a reduced capacity to pay taxes for the year 2023 on your tax return that you complete in the spring of 2024.
Alternatively, submit the information on paper with Form 50A — Earned income and deductions. Claiming the deductibe expenses on paper
How does this affect my tax assessment?
The special deduction is directed toward the income you have earned during the tax year. This means that the deducted amount of money will not reduce your taxes – instead, it reduces the amount of taxable earned income you have.
For example, if you are entitled to deduct €900, it does not mean that the year’s taxes would be reduced by €900 for you.