Icelandic tax tables 2026
The three withholding steps (state income tax plus the average municipal tax), the annual thresholds, the personal tax credit and its transfer between spouses, the tax-free thresholds, the 2026 municipal tax (útsvar) of every municipality, capital income tax, the employee's and employer's pension contributions, the social security tax (tryggingagjald) with its parts, the minimum-wage position, public holidays, VAT, calculated remuneration for the self-employed, the foreign-expert deduction and the end of the remote-work visa, each figure with its official source.
- 2026-01-01 to 2026-12-31
- ISK
Some figures on this page are still under review against the official sources and are marked below.
Income tax
Withholding tax (staðgreiðsla): three steps, per month
| Monthly pay after the employee's pension contributions, per month | Rate |
|---|---|
| Step 1 (skattþrep 1): 16.55% income tax + 14.94% average municipal tax: kr 0 to kr 498,122 | 31.49% |
| Step 2 (skattþrep 2): 23.05% income tax + 14.94% average municipal tax: kr 498,122 to kr 1,398,450 | 37.99% |
| Step 3 (skattþrep 3): 31.35% income tax + 14.94% average municipal tax: Over kr 1,398,450 | 46.29% |
Each step's rate applies to the part of the month's pay inside the step. The combined rate is the state income tax (tekjuskattur) plus the average municipal tax (útsvar) of 14.94%, which is used in withholding everywhere; the municipality's own rate is settled in the annual assessment. The personal tax credit is deducted from the tax calculated.
Source: Skatturinn: Staðgreiðsla 2026 (Hlutföll og fjárhæðir); Fjármála- og efnahagsráðuneytið: Breytingar á staðgreiðslu um áramótin (22 December 2025) · retrieved 2026-11-11
State income tax, municipal tax and annual thresholds
| Item | Value |
|---|---|
| State income tax (tekjuskattur) in step 1 | 16.55% |
| State income tax (tekjuskattur) in step 2 | 23.05% |
| State income tax (tekjuskattur) in step 3 | 31.35% |
| Average municipal tax (meðalútsvar) used in withholdingthe same in every municipality during the year | 14.94% |
| Annual threshold: step 2 starts above | kr 5,977,470 |
| Annual threshold: step 3 starts above | kr 16,781,397 |
| Spouses sharing steps 2 and 3 | Ended from income year 2026: spouses and cohabitants can no longer share steps 2 and 3 when one is in step 3 and the other is not |
| Children born 2011 or later: tax rate on income above the allowance4% income tax + 2% municipal tax | 6% |
| Children: annual income allowance | kr 300,000 |
Thresholds and the personal credit are raised each January by the consumer price index plus 1% for productivity growth (5.5% for 2026).
Source: Skatturinn: Staðgreiðsla 2026 (Hlutföll og fjárhæðir); Fjármála- og efnahagsráðuneytið: Breytingar á staðgreiðslu um áramótin (22 December 2025) · retrieved 2026-11-11
Personal tax credit (persónuafsláttur) and tax-free thresholds
| Item | Value |
|---|---|
| Personal tax credit, per month | kr 72,492 |
| Personal tax credit, per year | kr 869,898 |
| Share of a spouse's unused credit that can be used, 2026married couples living together and cohabitants who qualify for joint taxation | 100% |
| Personal tax credit, half-month pay period | kr 36,246 |
| Personal tax credit, 14-day pay period | kr 33,366 |
| Personal tax credit, one-week pay period | kr 16,683 |
| Unused credit | Builds up during the year and can be used in later months; it does not carry over to the next year |
| Tax-free threshold on the tax base, per monthSource: stjornarradid.is · retrieved 2026-11-11 | kr 230,206 |
| Tax-free threshold on the tax base, per yearSource: stjornarradid.is · retrieved 2026-11-11 | kr 2,762,458 |
| Tax-free threshold on wages before the 4% pension contribution, per monthSource: stjornarradid.is · retrieved 2026-11-11 | kr 239,798 |
| Tax-free threshold on wages before the 4% pension contribution, per yearSource: stjornarradid.is · retrieved 2026-11-11 | kr 2,877,560 |
Basis: Deducted from the tax calculated
Residents aged 16 or over get the credit; people who move to or from Iceland during the year get it for the days they were resident.
Source: Skatturinn: Staðgreiðsla 2026 (Persónuafsláttur); Skatturinn: Persónuafsláttur; Fjármála- og efnahagsráðuneytið: Breytingar á staðgreiðslu um áramótin (22 December 2025) · retrieved 2026-11-11
Municipal tax (útsvar) by municipality, 2026
| Item | Value |
|---|---|
| Statutory minimum rateSource: samband.is · retrieved 2026-11-11 | 12.44% |
| Statutory maximum rateSource: samband.is · retrieved 2026-11-11 | 14.97% |
| Weighted average of all municipalities (used in withholding)Source: samband.is · retrieved 2026-11-11 | 14.94% |
| Surcharge above the maximum a municipality in serious financial difficulty may charge with the minister's consent, up toof the maximum rateSource: samband.is · retrieved 2026-11-11 | 25% |
| Reykjavíkurborg (0000) | 14.97% |
| Kópavogsbær (1000) | 14.93% |
| Seltjarnarnesbær (1100) | 14.54% |
| Garðabær (1300) | 14.71% |
| Hafnarfjarðarkaupstaður (1400) | 14.93% |
| Mosfellsbær (1604) | 14.97% |
| Kjósarhreppur (1606) | 14.45% |
| Reykjanesbær (2000) | 14.97% |
| Grindavíkurbær (2300) | 14.97% |
| Sveitarfélagið Vogar (2506) | 14.97% |
| Suðurnesjabær (2510) | 14.97% |
| Akraneskaupstaður (3000) | 14.97% |
| Skorradalshreppur (3506) | 14.97% |
| Hvalfjarðarsveit (3511) | 14.14% |
| Borgarbyggð (3609) | 14.97% |
| Grundarfjarðarbær (3709) | 14.97% |
| Eyja- og Miklaholtshreppur (3713) | 14.97% |
| Snæfellsbær (3714) | 14.97% |
| Sveitarfélagið Stykkishólmur (3716) | 14.97% |
| Dalabyggð (3811) | 14.97% |
| Bolungarvíkurkaupstaður (4100) | 14.97% |
| Ísafjarðarbær (4200) | 14.97% |
| Reykhólahreppur (4502) | 14.97% |
| Vesturbyggð (4604) | 14.97% |
| Súðavíkurhreppur (4803) | 14.97% |
| Árneshreppur (4901) | 14.97% |
| Kaldrananeshreppur (4902) | 14.97% |
| Strandabyggð (4911) | 14.97% |
| Húnaþing vestra (5508) | 14.97% |
| Sveitarfélagið Skagaströnd (5609) | 14.97% |
| Húnabyggð (5613) | 14.97% |
| Skagafjörður (5716) | 14.97% |
| Akureyrarbær (6000) | 14.97% |
| Norðurþing (6100) | 14.97% |
| Fjallabyggð (6250) | 14.93% |
| Dalvíkurbyggð (6400) | 14.97% |
| Eyjafjarðarsveit (6513) | 14.97% |
| Hörgársveit (6515) | 14.97% |
| Svalbarðsstrandarhreppur (6601) | 14.97% |
| Grýtubakkahreppur (6602) | 14.97% |
| Tjörneshreppur (6611) | 14.97% |
| Þingeyjarsveit (6613) | 14.97% |
| Langanesbyggð (6710) | 14.97% |
| Fjarðabyggð (7300) | 14.97% |
| Múlaþing (7400) | 14.97% |
| Vopnafjarðarhreppur (7502) | 14.97% |
| Fljótsdalshreppur (7505) | 12.44% |
| Vestmannaeyjabær (8000) | 14.91% |
| Sveitarfélagið Árborg (8200) | 14.97% |
| Sveitarfélagið Hornafjörður (8401) | 14.97% |
| Mýrdalshreppur (8508) | 14.97% |
| Skaftárhreppur (8509) | 14.97% |
| Ásahreppur (8610) | 14.97% |
| Rangárþing eystra (8613) | 14.97% |
| Rangárþing ytra (8614) | 14.97% |
| Hrunamannahreppur (8710) | 14.97% |
| Hveragerðisbær (8716) | 14.97% |
| Sveitarfélagið Ölfus (8717) | 14.97% |
| Grímsnes- og Grafningshreppur (8719) | 14.14% |
| Skeiða- og Gnúpverjahreppur (8720) | 14.97% |
| Bláskógabyggð (8721) | 14.97% |
| Flóahreppur (8722) | 14.97% |
Basis: Taxable income (the same base as the state income tax), per year
62 municipalities; 52 charge the maximum 14.97%. The rate is flat on all income of residents and is settled in the annual assessment against the 14.94% withheld during the year. Municipality numbers are in brackets.
Source: Samband íslenskra sveitarfélaga: Útsvarsprósentur sveitarfélaga (Excel, column 2026; file last saved 5 January 2026), linked from https://www.samband.is/tekjustofnar; Skatturinn refers to this list for every municipality's útsvar · retrieved 2026-11-11
Employee contributions
Employer costs
Minimum wage
| Item | Value |
|---|---|
| Statutory minimum wage | None: minimum pay for each job is set by collective wage agreements (by age and/or length of service) |
Employees may agree better terms than the collective agreement's minimum.
Source: Ísland.is: Salary (The Financial Management Authority, Fjársýslan) · retrieved 2026-11-11
Other rates
Capital income tax (fjármagnstekjuskattur)
| Item | Value |
|---|---|
| Tax rate on capital income | 22% |
| Annual allowance per person (interest, and dividends and gains on listed shares) | kr 300,000 |
| Annual allowance for a married couple | kr 600,000 |
| Residential letting (at most two properties): share of rent taxed, without deductions | 75% |
Source: Skatturinn: Helstu tölur og prósentur 2026 · retrieved 2026-11-11
Public holidays 2026
These figures are still being checked against the official source.
| Item | Value |
|---|---|
| Nýársdagur (New Year's Day) | 2026-01-01 |
| Skírdagur (Maundy Thursday) | 2026-04-02 |
| Föstudagurinn langi (Good Friday) | 2026-04-03 |
| Páskadagur (Easter Sunday) | 2026-04-05 |
| Annar í páskum (Easter Monday) | 2026-04-06 |
| Sumardagurinn fyrsti (First Day of Summer) | 2026-04-23 |
| 1. maí (Labour Day) | 2026-05-01 |
| Uppstigningardagur (Ascension Day) | 2026-05-14 |
| Hvítasunnudagur (Whit Sunday) | 2026-05-24 |
| Annar í hvítasunnu (Whit Monday) | 2026-05-25 |
| 17. júní (National Day) | 2026-06-17 |
| Frídagur verslunarmanna (Commerce Day) | 2026-08-03 |
| Aðfangadagur jóla (Christmas Eve, from 13:00) | 2026-12-24 |
| Jóladagur (Christmas Day) | 2026-12-25 |
| Annar í jólum (Boxing Day) | 2026-12-26 |
| Gamlársdagur (New Year's Eve, from 13:00) | 2026-12-31 |
Christmas Eve and New Year's Eve are holidays from 13:00. Ordinary Sundays are also holidays and are not listed.
Source: Althingi: Lög um 40 stunda vinnuviku nr. 88/1971, 6. gr. (frídagar); lög um helgidagafrið nr. 32/1997 (helgidagar þjóðkirkjunnar) · retrieved 2026-11-11
Value added tax (virðisaukaskattur)
| Item | Value |
|---|---|
| Standard rate | 24% |
| Reduced rate: food, accommodation, books, newspapers, passenger transport, heating, broadcasting licences and some other items | 11% |
| Registration threshold: taxable sales in any 12 monthsregistration is optional below it | kr 2,000,000 |
Source: Skatturinn: Skattskylda og skattprósentur (virðisaukaskattur); Skatturinn: Skráning á virðisaukaskattsskrá; Skatturinn: Helstu tölur og prósentur 2026 · retrieved 2026-11-11
Self-employed: calculated remuneration (reiknað endurgjald), 2026 minimums
| Item | Value |
|---|---|
| Rule | People working in their own business must pay themselves a calculated wage, at least what they would earn doing the same work for an unrelated employer and not below the tax authority's minimum for their category; it is taxed like wages, with withholding tax, tryggingagjald and pension contributions |
| Controlling shareholders | The same rule applies to a person who, alone or with close family or working shareholders, owns 50% or more of a company and personally owns 5% or more |
| Category A(6), per monthSpecialist (doctors, lawyers, engineers, IT and financial specialists and similar) working alone, with bought-in work up to one employee's annual pay | kr 1,440,000 |
| Category A(9), per monthSpecialist starting self-employment for the first time, alone or with one employee (first year only) | kr 1,199,000 |
| Category B(5), per monthGeneral business, industry, trade, fishing and services: working alone or with fewer than two employees | kr 933,000 |
| Category B(9), per monthGeneral business: starting self-employment for the first time, alone or with one employee (first year only) | kr 681,000 |
| Category C(6), per monthMedia, artists, entertainers, publishers, specialised sales or services: working alone without employees or bought-in work | kr 795,000 |
| Category D(2), per monthTradespeople in licensed trades: working alone or with fewer than two employees | kr 813,000 |
| Category E(4), per monthUnskilled work such as cleaning, childminding and care work: fewer than two employees (may be reduced by 15% when working alone) | kr 651,000 |
| Category E(9), per monthCategory E: starting self-employment for the first time, alone or with one employee (first year only) | kr 472,000 |
Basis: Minimum monthly calculated remuneration by category
A selection of the categories A to H in the tax authority's 2026 rules; the annual amount is 12 × the monthly one (for example ISK 5,664,000 a year in category E(9)).
Source: Skatturinn: Reiknað endurgjald 2026 (viðmiðunarreglur ríkisskattstjóra) · retrieved 2026-11-11
Freelancers, the self-employed and new residents
| Item | Value |
|---|---|
| Self-employed: income tax | Calculated remuneration is taxed like wages: withholding tax through the three steps with the personal credit, tryggingagjald and pension contributions |
| Self-employed: tryggingagjald on their own calculated remunerationSource: skatturinn.is · retrieved 2026-11-11 | 6.35% |
| Self-employed: statutory minimum pension contribution, on calculated remunerationSource: stjornarradid.is · retrieved 2026-11-11 | 15.5% |
| Lowest 2026 calculated remuneration shown (category E(9)), per month | kr 472,000 |
| Flat or simplified income tax regime for the self-employed | None: the self-employed are taxed under the ordinary rules (calculated remuneration through withholding) |
| VAT registration threshold (taxable sales in 12 months)Source: skatturinn.is · retrieved 2026-11-11 | kr 2,000,000 |
| Foreign experts: share of wages exempt from income taxwithholding is taken from 75% of the wagesSource: skatturinn.is · retrieved 2026-11-11 | 25% |
| Foreign experts: years the exemption applies, from the start of employmentSource: skatturinn.is · retrieved 2026-11-11 | 3 |
| Foreign experts: who qualifiesSource: skatturinn.is · retrieved 2026-11-11 | Not resident in Iceland in the 60 months before starting work; knowledge not available or scarce in Iceland; hired by a company resident or with a permanent establishment in Iceland for research, development or innovation, teaching, specialised projects or key management |
| Foreign experts: where to applySource: skatturinn.is · retrieved 2026-11-11 | A committee appointed by the Ministry of Finance decides; the Icelandic Centre for Research (Rannís) handles applications |
| Remote-work visa (long-term visa for remote workers)Source: island.is · retrieved 2026-11-11 | None: the Aliens Act provision on long-term visas was repealed in 2026 (Directorate of Immigration notice of 2026-05-13) |
| Short-term residence permit (replacement, not for remote work)Source: island.is · retrieved 2026-11-11 | For stays over 90 days to visit close family or as an artist, scientist or athlete; at most 180 days at a time; fee ISK 12,200 |
| Where to applySource: island.is · retrieved 2026-11-11 | Residence permits: the Directorate of Immigration (Útlendingastofnun); visas: the Ministry for Foreign Affairs |
Iceland has no flat-rate scheme for freelancers. The foreign-expert rule (since 2017) exempts 25% of an approved expert's wages for 3 years; tryggingagjald and benefits are based on the full wages.
Source: Skatturinn: Reiknað endurgjald 2026 (viðmiðunarreglur ríkisskattstjóra) · retrieved 2026-11-11
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Official sources
- Skatturinn: Staðgreiðsla 2026 · retrieved 2026-11-11
- Skatturinn: Helstu tölur og prósentur 2026 · retrieved 2026-11-11
- Skatturinn: Persónuafsláttur · retrieved 2026-11-11
- Fjármála- og efnahagsráðuneytið: Breytingar á staðgreiðslu um áramótin (22 December 2025) · retrieved 2026-11-11
- Samband íslenskra sveitarfélaga: Útsvarsprósentur sveitarfélaga (Excel) · retrieved 2026-11-11
- Samband íslenskra sveitarfélaga: Tekjustofnar · retrieved 2026-11-11
- Fjármála- og efnahagsráðuneytið: Lífeyrissjóðir · retrieved 2026-11-11
- Ísland.is, Mannauðstorg ríkisins: Lífeyrismál · retrieved 2026-11-11
- Ísland.is: Salary · retrieved 2026-11-11
- Ísland.is, Mannauðstorg ríkisins: Séreignarsparnaður · retrieved 2026-11-11
- Skatturinn: Iðgjald í lífeyrissjóði · retrieved 2026-11-11
- Skatturinn: Tryggingagjald · retrieved 2026-11-11
- Skatturinn: Reiknað endurgjald 2026 · retrieved 2026-11-11
- Skatturinn: Skattskylda og skattprósentur (virðisaukaskattur) · retrieved 2026-11-11
- Skatturinn: Skráning á virðisaukaskattsskrá · retrieved 2026-11-11
- Skatturinn: Erlendir sérfræðingar · retrieved 2026-11-11
- Útlendingastofnun: Vegabréfsáritanir færast til utanríkisráðuneytisins (13 May 2026) · retrieved 2026-11-11
- Ísland.is: Short-term residence permit · retrieved 2026-11-11
- Althingi: Lög um 40 stunda vinnuviku nr. 88/1971, 6. gr. (frídagar); lög um helgidagafrið nr. 32/1997 (helgidagar þjóðkirkjunnar) · retrieved 2026-11-11
How every figure is checked: methodology. All datasets: CalcBloc data.
Employee contributions: pension
Basis: Total pay
Pension membership is mandatory for everyone working in Iceland from age 16 to 70, employees and the self-employed alike.
Source: Ísland.is, Mannauðstorg ríkisins (Fjársýslan): Lífeyrismál; Ísland.is: Salary (The Financial Management Authority) · retrieved 2026-11-11