The Contribution Deduction: Where the Refunded Money Comes From

The money you receive under the contribution deduction is your own personal income tax, already withheld from you earlier and paid into the budget. The state adds nothing on top of your contribution: it recalculates your tax base for the year with the contribution taken into account, sees an overpayment and returns exactly that. Everything else follows from this — the ceiling on the refund, the reasons it turns out smaller than expected, and the obligation to give back what you received if the account is closed early.

The deduction reduces the base, it does not credit a bonus

Formally, the contribution deduction is not a payment but a right to reduce the amount of income on which tax is calculated. The mechanics are as follows: during the calendar year you paid money into the account; on recalculation, the tax base for that year is reduced by the part of the contribution that is allowed; the tax calculated on the reduced base turns out to be lower than the tax actually withheld from you. That difference is what gets refunded.

So the size of the refund is the allowed amount of the contribution multiplied by the rate at which tax was withheld from you. Neither the contribution in itself nor the return earned on the account affects this amount. The exact limits and rates are legal constants, and they change together with the law: 13%. For more on the logic of the concept itself, see the glossary entry on the contribution deduction.

The path of the money, step by step

Step 1. The contribution is credited to the account in a specific calendar year — and that year becomes the period for which the deduction is calculated. A contribution that arrives after the year has changed falls into the next period, even if you sent it the day before.

Step 2. You claim the right to the deduction — by filing a tax return or through the simplified procedure, if it is available for your account. At this step the tax authority checks two things against each other: the amount of the contribution within the limit, and the amount of tax withheld from you for the same year.

Step 3. The confirmed overpayment is returned to your bank details or offset against other tax liabilities. If there is no overpayment, there is nothing to return, and no "unclaimed remainder" is carried forward to future years.

Why the refund is often smaller than expected

The reasons almost always come down to setting the contribution against the tax actually paid.

The contribution limit. Not the whole contribution is counted, only the part that falls within the set amount. You may pay in more — it will not affect the calculation of the refund.

Tax paid as the ceiling. You cannot get back tax that was never paid. If your income for the year is small, the tax withheld on it is modest, and the refund will be capped by that figure rather than by the contribution limit.

The type of income. What qualifies is income on which tax has actually been withheld at the applicable rate: as a rule, this means wages and payments treated as equivalent to them. Under the general rule, deductions do not apply to income from equity participation, so dividends received do not enter the base for the refund — even if you follow the payout calendar closely and {{dividend_calendar|limit=5}} shows the nearest record dates for your securities. Coupons and gains from the sale of securities follow their own accounting logic, and it depends on the type of account.

Competing deductions. If you claim several deductions for the year, it matters whether yours belongs to a common group with a single overall cap or has a limit of its own. This distinction directly determines the outcome, and it should be checked against the rule currently in force, not from memory: the breakdown of deductions on the IIS-3 explains why what is refunded there is the tax paid, not a part of the contribution.

Contribution deduction and income deduction: a choice, not a package

The second type of relief, the deduction on income, works from the other side: it exempts the financial result on the account from tax. These mechanisms draw on different sources — the first on your personal income tax already withheld on outside income, the second on future income inside the account. That is why they do not add up: where the rules require a choice, you have to make it in advance, based on your own situation. If you have almost no tax to reclaim, the contribution deduction gives you little, and the case shifts towards the second type. Standing apart is the holding-period tax deduction — the deduction for long-term ownership, which applies to an ordinary brokerage account and has nothing to do with contributions.

What to check against your own data

This article explains the mechanism, but it does not do the sums for you. The specific limit, the withholding rate and the minimum term of the account are legal values: take them from 13% and from the rules for your type of account as of the date of the contribution, not from articles written in past years. The amount of tax withheld for the year can be seen in your income certificate — and that is the figure that caps the refund from above.

The composition of the portfolio has no bearing whatsoever on the size of the contribution deduction: the relief is calculated from the contribution and your tax, not from whether the account holds shares, OFZ bonds or fund units. Valuation multiples and other market indicators simply play no part in this calculation — you can check them for an individual security on its page, for example {{instrument:SBER}} with the metric 3,77, but that has nothing to do with the tax refund.

The terms that appear in this text are collected in the glossary.