Inheritance and Gift Tax Reduced as of 1 January 2026 – How Will the Changes Affect You?

The amendments to the Inheritance and Gift Tax Act that entered into force at the beginning of 2026 introduce significant relief for the transfer of wealth. Higher tax-free thresholds, the expansion of succession relief for family businesses, and reduced late-payment interest create new opportunities for planning gifts, inheritances, and business ownership transfers. The purpose of the legislative changes is to facilitate the transfer of assets from one generation to the next and to ease the tax burden particularly in smaller estates.

Increased tax-free thresholds create new opportunities

As of 1 January 2026, the minimum threshold for inheritance tax increases from €20,000 to €30,000, and the threshold for gift tax rises from €5,000 to €7,500. This allows larger amounts of assets to be transferred without tax consequences.

For example, a person who has given €4,999 to a recipient before 2026 may, under the new law, give an additional €2,500 within a three-year period without triggering gift tax, provided that the three-year aggregation rule is taken into account.

In addition, the tax-free threshold for ordinary household effects increases from €4,000 to €7,500, reducing the tax burden related to estate administration and the valuation of smaller assets.

It is important to remember that advancements (gifts treated as advances on inheritance) are always treated as gifts for tax purposes. Therefore, all assets transferred during the donor’s lifetime fall within the scope of gift taxation before the deceased’s passing.

Succession relief extended to minors

A significant reform in the 2026 legislation is the extension of succession relief to minor heirs. Previously, such relief was available only to heirs who had reached the age of majority. Under the new law, the relief may also apply to a minor heir if their legal guardian continues the business activity, for example as a member of the board of directors or as managing director.

This change facilitates the transfer of family businesses in situations where the successor has not yet reached adulthood.

Reduced late-payment interest – lower cost for delayed tax payments

The reform also reduces the late-payment interest margin applicable to inheritance tax. Going forward, the interest will be calculated as the reference rate confirmed by the Bank of Finland plus two (2) percentage points, whereas previously the increase was 3.5 percentage points.

In practice, this means that late payment of inheritance tax will be less costly than before. The change is particularly relevant in situations where additional time is needed to pay the tax or where the liquidation of assets takes time.

What we recommend doing now – and how we can help ensure the right decisions

The 2026 changes open up new planning opportunities, but making full use of them requires a comprehensive assessment. We recommend reviewing the timing of planned gifts, as many transfers may become tax-free if carried out in 2026 once the new thresholds apply.

It is also advisable to review your will if it includes monetary provisions tied to previous tax thresholds. Legacies linked to outdated figures may no longer reflect the testator’s original intentions.

In the context of family business transfers, it is worth assessing whether the new relief applicable to minors could provide a more tax-efficient solution. However, before implementing a generational transfer, we always recommend applying for an advance ruling from the Tax Administration to ensure that the conditions for the relief are met in advance.

Costa Juridica helps you assess how these changes affect your specific situation, whether you reside in Finland or abroad, and assists in planning gifts, inheritances, and the necessary documentation, such as wills and deeds of gift. We also support clients in succession planning for family businesses, ensuring that all decisions are implemented in a legally sound and tax-efficient manner.