Tax credit for electricity – payers of very high costs can receive a credit
You can be entitled to a tax credit if electricity expenses are high in your permanent home. The credit is a temporary measure in response to increased prices. Only the expenses for January, February, March and April 2023 will qualify.
How much is the credit?
If the total 4-month cost exceeds €2,000 you are entitled to the tax credit. The size of the credit is 60% of the part going over the 2,000-euro threshold.
- Maximum credit is €2,400 per 1 permanent residence. This means that the maximum value is specific for one electricity meter, not taxpayer-specific. For example, a married couple can be given max. €2,400 credit.
- If you use more than one permanent residence, the credit can still only concern one permanent residence. No tax credit for electricity is available for summer cottages, holiday homes, etc.
- For the maximum credit, you would have to pay a total 4-month cost of 6,000.
- There is a threshold of €100, applied on the electricity credit and all other credits for household expenses. This means that if you claim no other credits for household expenses, the 100-euro threshold is subtracted from your credit for electricity. However, the credit has no impact on the work costs that qualify for the usual credit for household expenses; and it has no impact on these costs’ maximum creditable value.
- You and your partner who lives together with you can divide the tax credit, if both of you pay for electricity.
Example: Electricity during January, February, March and April 2023 cost €3,000 in your permanent home, according to the billing you receive from the power company. The credit calculations concern the part incl. VAT that exceeds €2,000. In this example, it is one thousand euros. The credit is 60% × €1,000 = €600.
If you claim no other credit for household expenses, you must first subtract the 100-euro credit threshold from the €600 above. Accordingly, you get €500 in tax credit.
Example: Your partner owns a one-family house. You and your partner live there together on a permanent basis. Electricity during January, February, March and April 2023 cost €3,000 according to the billing the two of you receive from the power company. If each of you pays part of the cost, each of you must claim tax credits reflecting the 2 individual parts.
The qualifying part of the expenses is the part exceeding €2,000 in other words, €1,000. Assuming that you and your partner divide it fifty-fifty, credit base is €500 for each of you. The credit is 60 percent of that, i.e. 60% × €500 = €300.
Thresholds concern each person individually, so each of you must first subtract €100 unless you claim credits for other household expenses as well. After the above subtractions, each of you are credited €200.
Follow the path below to ask for the credit
Go over your electricity bills
Check your paid electricity bills for 4 months carefully: January, February, March and April 2023. The date when you pay the bill or invoice is not important — but you must pay it in 2023.
If it is still unclear how much the actual 4-month cost has been because you have not yet received the bill, you can estimate it.
Include the price with VAT and the basic monthly charge. No tax credit is available concerning electricity transmission. Accordingly, your calculation must not contain any charges related to transmission of electricity. Please contact your power company to ask about the meaning of the different amounts stated on the bills, if necessary.
Note: The creditable paid expense included in the bills is the actually used electricity from January to April. Do not include electricity for December 2022 in your calculation even if you might receive a bill with a January 2023 due date. However, your calculation should contain the electricity for April 2023 although the due date for payment might be in May.
If the total 4-month cost exceeds €2,000 you are entitled to the tax credit.
REQUEST A NEW TAX CARD, AND REFER TO THE ELECTRICITY EXPENSES
You can request a revised tax card to lower your withholding percentage on your wages, so you benefit from the credit already in 2023. This way, the tax credit for electricity can make your withholding smaller for the remaining months of 2023.
Revised tax card soon after the beginning of 2023
You can estimate your household’s expenses for electricity in January, February, March and April and send the estimate to the Tax Administration. This can be done as early as 1 January 2023.
Later, when you know the exact cost, you can ask for a new tax card again if necessary. This ensures that the percentage rate on your card has reflected your actual income-tax liability quite well. This way, it is less likely that you would have to pay a back tax later, which may be caused by electricity expenses that ended up being lower than the estimate you sent to the Tax Administration. The final deadline for the exact amounts is by the pre-completed tax return’s deadline in the spring of 2024.
Making changes to your tax card later in 2023
Another alternative is to request a revised tax card some time later in 2023, at a time when power company billing for the first months of 2023 is ready, so you can fill in the exact January – April expenses. This alternative lets you fill in the exact amounts when you complete the request form for the revised card.
Check your pre-completed tax return and add the expenses to it
If, during 2023, you request changes to your tax card and submit a claim for the tax credit for electricity, your 2024 pre-completed tax return will show this information and the amount of the credit given. Check the pre-completed amounts in spring 2024 and make corrections if needed.
If you did not request changes to your tax card, add your credit claim to the pre-completed tax return. The credit will be taken into account in your tax decision for tax year 2023. You will receive the decision by late October 2024.
No immediate tax refund because of the credit for electricity
If you indicate your electricity expenses when you request a revised tax card, you get a lower withholding percentage rate for the remaining months of 2023. Accordingly, there is no possibility for a refund that would immediately be paid to taxpayers’ bank accounts.
Example: You made an estimate based on electricity bills you had received earlier, that you’d probably pay €3,000 in total for electricity in January to April. You get credit as follows: (€3,000 – €2,000) × 60% = €600. Because you have no other credit for household expenses, the threshold of €100 will apply.
You inform the Tax Administration in early 2023 of your high electricity expenses by requesting a revised tax card. No refund is paid to your bank account — instead, you get a lower withholding percentage rate on your tax card for the remaining months of 2023.
Are your taxes high enough?
The credit is subtracted from your taxes directly. There may be circumstances where the credit amount is greater than the individual taxpayer’s total taxes. If the credit is greater than your taxes, the Tax Administration will automatically deduct the remaining credit from your spouse’s taxes. Use the withholding calculator to estimate how much your income taxes are.
One way to estimate how much the year’s taxes are is to look up the enclosure to your 2023 tax card, which is in MyTax: First go to the Communication tab and then click Open decisions and letters under Decisions and letters.
It is not possible to give exact thresholds because they depend on whether you receive wage, pension or benefit income; what municipality you live in; how old you are; whether you pay church tax; and what credits and deductions you can claim. In addition, you may have capital income that generates taxes.
The thresholds below are therefore only indicative. You can estimate your personal tax amount with the tax rate calculator, for example.
- On average, tax will be withheld
- when your wage income exceeds around €18,600 in Helsinki
- when your wage income exceeds around €16,900 in Mikkeli.
- You are eligible for a full tax credit for electricity if your electricity costs exceed €6,000 and your average wage income is
- around €28,320 in Helsinki
- around €26,700 in Jyväskylä
- around €25,400 in Mikkeli.
- Tax starts to accrue when the pension exceeds €12,882 in mainland Finland. In the Åland Islands, the threshold is €10,360.
- You are eligible for a full tax credit for electricity if your electricity costs exceed €6,000 and your average pension income is
- €19,180 in Helsinki
- €18,500 in Jyväskylä
- €18,050 in Mikkeli.
If the credit amount is greater than your taxes, apply for Kela’s assistance
If your taxes for the year are low, so the credit for electricity would not be useful, you can apply to Kela for temporary electricity assistance. For more information, see the website of Kela.
Note: If you have been granted basic social assistance for an entire electricity bill, you can no longer receive any tax credit for electricity or assistance with electricity costs on the basis of that particular bill. The same goes for other direct forms of public financial support related to recent rise in the price of electricity. Kela informs the Tax Administration online of the beneficiaries of the Kela-paid assistance.
Retroactive reimbursement for electricity costs
The retroactive reimbursement for electricity costs supplements the tax credit for electricity granted by the Tax Administration and the assistance with electricity costs paid by Kela. The reimbursement is payable on electricity bought between 1 November 2022 and 28 February 2023.
The reimbursement for electricity costs is not granted by Kela or the Tax Administration. Instead, electricity companies automatically subtract the amount from the electricity bill.
The retroactive reimbursement for electricity costs has no effect on the tax credit for electricity granted by the Tax Administration Even if you receive reimbursement for electricity costs from your electricity company, you can still get a full tax credit for electricity. In other words, the reimbursement for electricity costs is not deducted from the electricity costs.
The credit is not available if electricity expenses are connected to farming or business
If you have just one electricity meter, measuring the use of electric power both for your agricultural/business activities and for your permanent home that you live in, you must divide the expenses between residential and other uses. Subtract the part serving the agricultural activity from your farm income. Likewise, subtract the part serving a business purpose from your business income. Remaining electricity expenses qualify for the credit as normal.
The above principle is also applied to any other operation for the production of income: for example, if you rent out a room to a tenant, you are not allowed to claim credit for the room’s electricity and account for the same electricity expense as a tax-deductible cost connected to your rental operation.