Taxation of earnings-related allowance

Earnings-related allowance is taxable income. For withholding tax, we can apply either

  • a revised tax card applied for a benefit:
    The tax rate is applied as such. When you order a revised tax card for social benefits in MyTax, the tax card will automatically be sent to the fund within two working days. You do not need to send it separately. When ordering the tax card, please choose the KOKO unemployment fund (Korkeasti koulutettujen työttömyyskassa KOKO) as the payer of the benefit.
  • or a tax card determined for employment income:
    The tax withheld will be at least 25%. You do not need to send the salary tax card to KOKO.

You are personally responsible for making sure that the tax on your earnings-related allowance is appropriate. KOKO cannot retroactively adjust the withholding tax on allowances that have already been paid. You can see your withholding tax information in the Status information section in eService and in your payment notification.

We recommend that you provide us with a revised tax card for the purpose of the benefit

As an allowance recipient, we recommend that you apply for a revised tax card for a benefit for the taxation of your earnings-related allowance. In this case, we will apply the tax rate indicated on the tax card. This will also allow you to determine the appropriate tax rate specifically for your earnings-related allowance.

You can apply for the tax card via the Tax Administration’s online service. We will apply the new tax rate for allowance payments made after we have received the card.

Instructions on the Tax Administration’s website: How to request a tax card for wage or benefit income in MyTax

Tax card for salary or wages

You do not need to send us the salary tax card automatically mailed to your home address by the Tax Administration, as unemployment funds receive this information directly from the Tax Administration. If we use a salary tax card for withholding tax on your earnings-related allowance, the tax rate is at least 25%, even if the tax rate stated on your tax card is lower.

New tax cards are applied from 1 February.

For allowance payments in January, we apply your tax rate from the previous year, unless you send us a separate tax card for January. The accumulated income on the tax card is reset at the turn of the year.

Good to know when you are checking your tax return: If you have received an earnings-related allowance, the benefits paid will be reported as your taxable income for the year. The fund will report the benefits to the Tax Administration based on the payment date regardless of the period covered.

More information can be found on the Tax Administration website.

Taxation of transition security allowance

If you are applying for transition security allowance, read more about its taxation on the Transition security page.