The 2026 budget proposal includes reduced corporate tax rates, tightened crypto reporting requirements, adjusted VAT rates, and cuts to CO2 fuel taxes, as well as increased taxes on vehicles, tobacco, alcohol, and soft drinks.
Finland’s government announced the results of its two-day meeting on measures for the Budget for 2026 on 2 September 2025.
This follows the government parties’ agreement to negotiate the proposed tax measures during the budget meeting on 1-2 September 2025.
The 2026 Budget bill incorporates measures from the Ministry of Finance’s budget proposal dated 8 August 2025. Additionally, the government plans to reduce various business subsidies significantly.
Key measures are as follows:
Corporate tax
The Government will improve the conditions for entrepreneurship by reducing the corporate tax to 18% starting in 2027.
R&D
The government will continue to invest in improving transport connections, enhancing expertise, and promoting R&D. The most significant increases in funding will be allocated to accelerating research and development carried out by businesses.
The budget authority earmarked for research and development by Business Finland is expected to grow by more than EUR 100 million. EUR 30 million will be allocated to boosting R&D at universities. Finally, the Government proposes allocating EUR 8 million to the Economic Development Centres to launch a three-year pilot aimed at increasing the volume of research and development in SMEs.
The parliamentary agreed state share of 1.2% of GDP in R&D funding will continue to be maintained in 2030. However, the R&D Funding Act will be updated to reflect the latest economic forecast from the Ministry of Finance.
According to the current law, the latest economic forecast would only have been taken into account in connection with the preparation of the 2028 budget proposal. The change in law will be implemented in a way that reduces the growth of state R&D investments by EUR 25 million in 2026 and by EUR 80 million in 2027.
In addition, Sitra’s funding allocated to R&D activities would in future be counted as part of the state funding share. The effect would be EUR 15 million at the 2027 level. In 2026, R&D funding will increase by approximately EUR 255 million compared to the total amount in 2025 and by approximately EUR 215 million in 2027 compared to 2026.
VAT
Purchasing power will be boosted by the decision to lower the tax rate on commodities from the 14% VAT rate to 13.5%, extend the deduction for donations, and increase the forest management tax credit.
Tax revenue will grow by raising the VAT rate for public service broadcasting and by increases in the excise duty on tobacco products and soft drinks, as well as the tax on mined minerals. Taxes on nicotine pouches and e-cigarette liquids will also be raised.
Electricity tax
The electricity tax subsidy for mining will be abolished as of 1 January 2026. The strategic stockpile fee will be raised as of 1 April 2026.
Excise duties
Excise duties on wines and other fermented beverages will be raised, and the excise duty on alcoholic drinks will be indexed, taking into account the previously introduced higher duties on strong alcoholic beverages.
Other taxes
The lower limits of inheritance and gift tax will be increased, and the interest rate margin on late-payment interest for inheritance tax will be reduced. The tax subsidy for zero-emission employer-subsidised cars will be continued in line with the earlier decision for 2026-2029. The carbon dioxide component of the tax on transport fuels will also be lowered.
The Government will block share swap arrangements designed to minimise dividend taxation. Additionally, the obligation of crypto-asset service providers to provide information will be expanded.
Individual income taxes
The Government’s tax policy aims to boost the purchasing power of households, enhance incentives for work, and foster conditions for economic growth. In line with the Government Programme, the Government’s tax policy encourages work and self-employment and supports domestic ownership.
Incentives to work include easing taxation on labour for low-income and middle-income wage earners by EUR 520 million starting in 2026 and by EUR 125 million beginning in 2027, raising the child allowance for earned income deductions, and lowering the highest marginal tax rate to approximately 52%. The tax at source paid by key persons will be reduced to 25% and tax relief for Finnish citizens returning to Finland will be introduced.
