The latest reform of the inheritance tax in Finland raises the tax‑free threshold from 20,000 to 30,000 euros from the beginning of 2026, after Parliament approved changes to inheritance and gift taxation on Wednesday. The law also increases exemptions for gifts and household belongings and slightly relaxes payment terms, as part of the government’s broader tax policy package.
Higher tax-free thresholds for inheritances and gifts
Under the new rules, inheritance amounts below 30,000 euros will no longer be subject to tax. This is a significant change from the current threshold of 20,000 euros, which has been in place since 2009. The reform means that smaller estates, often involving modest savings or part of a family home, will fall entirely outside inheritance taxation.
The gift tax threshold is also being raised, from 5,000 to 7,500 euros. Gifts under that amount will not trigger a tax obligation, which gives families more room to transfer assets during their lifetime without extra paperwork or tax bills. In addition, the tax‑free value of ordinary household belongings received as inheritance or gift will increase from 4,000 to 7,500 euros, acknowledging both inflation and the rising value of everyday items in people’s homes.
The reform also relaxes payment terms for inheritance and gift tax, making it easier to spread payments over a longer period. This is particularly relevant for heirs whose assets are tied up in real estate or family businesses and who might otherwise have to sell quickly in order to cover the tax bill.
Government parties split over the future of inheritance tax
Finland’s inheritance tax policy had not been substantially revised for more than a decade, even as wages, asset prices and the cost of living increased. The centre‑right government led by Prime Minister Petteri Orpo has presented the reform as a way to update the system and reduce the tax pressure on families inheriting relatively small estates.
The National Coalition Party, which Orpo leads, has long argued for lighter taxation of wealth transfers and keeps a long‑term goal of abolishing inheritance tax altogether. Earlier this year, the government studied whether it would be feasible to remove the tax completely, but concluded that a full abolition was not justified for now.
Within the coalition, however, there is no consensus on going further. The Finns Party, the second‑largest government partner, has opposed abolishing inheritance tax and prefers to prioritise cuts to labour income taxation instead. For the Finns Party, the priority is to make work pay more, while accepting that some level of tax on inherited wealth should remain.
As a result, the reform represents a compromise: it eases the tax burden on smaller inheritances and gifts but retains the overall structure of the tax, keeping open a debate that is likely to resurface in future election campaigns.
Inheritance tax in Finland in a Nordic and European perspective
The changes also reshape how inheritance tax in Finland compares with other Nordic countries and the rest of Europe. In recent decades, Sweden and Norway have abolished inheritance and gift taxes altogether, while Denmark and Finland have kept them in place. Finland will therefore remain one of the few Nordic countries that still taxes wealth transfers between generations.
Across Europe, there is no single model. Some member states rely heavily on inheritance and estate taxes as tools for redistribution, while others collect relatively little revenue from them or have abolished them entirely. Finland already collected a modest share of its total tax income from inheritance and gift taxes, but the government has accepted that the reform will reduce annual revenues further, in exchange for higher tax‑free thresholds and, potentially, broader public support for the remaining tax.
For observers of the Nordic welfare model, the Finnish reform highlights how tax structures are evolving in response to ageing populations, wealth accumulation and debates over intergenerational fairness. While Finland is not following Sweden and Norway in abolishing inheritance tax, it is moving closer to the European trend of protecting smaller estates while maintaining taxation on larger transfers.
Who benefits from the reform, and what to watch next
The immediate beneficiaries of the reform will be households receiving smaller inheritances and gifts, including many middle‑income families whose assets are tied up in housing. For them, the higher thresholds mean that a larger share of what is passed on between generations will be tax‑free, improving the chances that a family home or savings can remain intact.
At the same time, the reform raises familiar questions about equality and distribution. Critics of inheritance tax cuts generally argue that lower taxation of wealth transfers can increase wealth inequality over time, especially when property prices are high and financial assets are concentrated in certain social groups. Supporters respond that fairer thresholds and more flexible payment terms can reduce hardship for heirs who are asset‑rich but cash‑poor.
The Finnish government has signalled that it will continue to assess the overall tax mix, including labour taxation and other levies, in the coming years. For now, the reform offers a partial answer: it modernises thresholds and rules that had become outdated, without closing the political debate over whether inheritance tax in Finland should eventually be scaled back further or abolished.
For Nordic and European observers, the move will be watched as another test of how welfare states balance revenue needs, intergenerational fairness and political demands for lower taxation on inherited wealth.
