Local taxes in Finland will differ by thousands of euros between municipalities next year, underscoring how much a person’s address can shape their overall tax burden.
How municipal tax rates now differ across Finland
An Yle comparison of municipal tax rates shows that, for a childless wage-earner with a median monthly salary of 3,291 euros, the gap between the highest- and lowest-taxed municipalities in mainland Finland will reach roughly 2,300 euros per year. The difference reflects both long-standing regional contrasts and recent adjustments following the country’s social and health care reform.
At the top of the scale is Pomarkku, a small municipality of fewer than 2,000 residents in the Satakunta region, with a municipal income tax rate of 10.9 percent. At the other end is Kauniainen, an affluent enclave fully surrounded by Espoo in the Helsinki metropolitan area, where the corresponding rate is just 4.7 percent. For an average-income earner, that gap translates into thousands of euros in extra municipal tax over the course of a year.
Economists underline that local taxes are only one part of the Finnish tax system, which also includes state income tax, social security contributions and church tax for those who are members of a parish. Still, the municipal rate has a direct and visible impact on pay slips, and it remains one of the clearest indicators of how local authorities choose to finance services.
Small municipalities raise local taxes while a few cut rates
The map of municipal tax changes is uneven. In total, 38 municipalities will raise their income tax rate next year, while just five are set to lower it, including one in the autonomous Åland Islands. The remaining 265 municipalities will keep their rate unchanged.
Most of the increases are concentrated in small and medium-sized municipalities that struggle with shrinking populations, ageing residents and rising costs for schools, care services and local infrastructure. Alongside Pomarkku, some of the highest rates in mainland Finland will be found in Ähtäri (10.6 percent), Halsua (10.5 percent) and Pukkila (10.4 percent).
At the same time, a handful of councils have decided that they can afford modest cuts. In Sodankylä, in Lapland, the municipal tax rate will fall from 8.0 to 7.5 percent, leaving one local resident to calculate that his annual saving of around 150 euros will disappear after just a couple of shopping trips. Other small municipalities, such as Halsua, are still among those with the highest rates despite recently trimming or freezing their tax level.
Health and social care reform still reshaping local tax levels
The current landscape of local taxation in Finland cannot be understood without the 2023 reform of health and social care. When responsibility for most health and social services was shifted from municipalities to new regional wellbeing services counties, municipal income tax rates were cut sharply and the state’s share of income tax was raised to compensate.
On paper, this brought average municipal tax percentages down from around 20 percent to roughly 7–8 percent. In practice, however, the redistribution did not eliminate pressure on local finances. According to the latest figures, 32 municipalities have already had to raise their municipal tax rate by more than one percentage point since the reform came into force, suggesting that the new system has not fully stabilised their budgets.
Local authorities continue to balance between tax competitiveness and the need to fund services that remain their responsibility, such as basic education, early childhood care, local roads and cultural facilities. For smaller municipalities with limited tax bases, even a modest change in population or employment can quickly show up in the municipal tax percentage.
Helsinki and Espoo remain among the low-tax municipalities
At the lower end of the scale, Helsinki, Espoo and the tiny coastal municipality of Kustavi will all have municipal tax rates of 5.3 percent next year, just behind Kauniainen. Large urban centres like Helsinki and Espoo benefit from broader tax bases, higher average incomes and a concentration of jobs, which allow them to keep local tax rates comparatively low while still financing extensive services.
For residents, the differences in municipal tax can be substantial but are rarely the only factor when choosing where to live. Housing costs, commuting options, access to schools and services and family ties often weigh more heavily in relocation decisions. Still, over time, the tax gap between a high-tax rural municipality and a low-tax urban centre can add up to several thousand euros for an average earner.
The Finnish system also includes national mechanisms to balance disparities, such as state transfers to less wealthy municipalities. These instruments are designed to ensure that access to basic services does not depend solely on local tax revenue, even when tax rates diverge.
What tax gaps mean for Finland’s regional future
The widening spread in local taxes across Finland highlights a broader regional challenge. Many of the municipalities that feel compelled to raise taxes are those already under demographic and economic pressure. Higher tax rates can help them maintain services in the short term, but they may also make it harder to attract new residents or businesses.
Conversely, low-tax municipalities in and around the Helsinki metropolitan area and other urban centres are able to offer both relatively moderate municipal tax rates and a wide range of public services. This may reinforce existing patterns of internal migration and investment.
The debate over municipal tax differences is likely to remain part of Finland’s wider discussion on regional equality and long-term public finances. In a Nordic context, Finland continues to rely heavily on municipal income tax to fund local services, while also experimenting with new structures such as the wellbeing services counties. How local tax rates evolve over the coming years will be closely watched, both by residents checking their pay slips and by policymakers looking for ways to keep regional Finland viable without widening the gap between municipalities.
