You may not need a new tax card for parental allowance
If you are paid parental allowance and although its amount is lower than your wages had been when you worked, your percentage of withholding still does not necessarily decrease. This is because wage income from employment gives rise to many expense deductions, but your parental allowance does not entitle you to the same deductions from taxes.
See which one of these 2 options is better for you:
- Kela calculates the withholding for your allowance automatically
- You submit an application for a revised tax card to change the percentage rate
Kela receives the information regarding your tax-card withholding directly from the Tax Administration. If you do not apply for a new tax card and send it to Kela, Kela will withhold tax from your maternity allowance (parental allowance) using formula-based rates:
Your income for entire year only consists of the allowance
- If the withholding on your pay is less than 25%, parental allowance will be taxed at 25%.
- If you receive the minimum parental allowance, it will be taxed at 20%.
You receive both wages and allowance during the year
- The rate for maternity (or parental) allowance is 40%.
- The rate for home care allowance or other taxable benefits is in accordance with the “additional” rate stated on your card.
- If you receive partial parental allowance, it will be taxed at the same rate as your wages.
The previous year’s percentage rate will be valid in January unless you have sent a revised tax card to Kela.
Submit an application for a revised card if necessary
If you do not want to use Kela’s “formula” percentages, and if the amount withheld from your allowance seems too high or too low, you can run the tax % calculator estimate your taxes.
Apply for revised tax cards if necessary. One card for your allowance and another card for your wage income should be applied for.
See the guidance for MyTax: