Accumulated personal tax credit

Personal tax credit that is not used within a given month accumulates and may be used later in the year.

You can see a table showing the permitted maximum usage by month to see whether personal tax credit has accumulated during the year.

Using accumulated personal tax credit

To use accumulated personal tax credit as a deduction wages are paid, you must specifically request this from your employer.

In the personal tax credit status overview on Skatturinn's service portal, you can download an overview for your employer (see button below the table) and send the document to your employer. It is best to do this after the 17th of each month, once all information has been received.

Individuals resident abroad generally do not have the right to a personal tax credit in Iceland. This also applies to Icelandic citizens. Individuals who move to Iceland or stay here temporarily for work generally have the right to a personal tax credit from the date of arrival until the date of departure. See further information on personal tax credit when moving to Iceland.

Unused personal tax credit at year-end

Unused personal tax credit at the end of the year does not carry over between years.

When the income year is settled at assessment (after the tax return has been filed), the use of the personal tax credit is reviewed, together with a spouse’s usage where applicable. If there is remaining personal tax credit, this may result in a refund of overpaid tax.

At assessment, the personal tax credit is allocated in the following order:

• The personal tax credit is first used to reduce the individual’s income tax and municipal tax for the year.

• If any personal tax credit remains, it is transferred to the spouse (if applicable).

• If unused personal tax credit still remains, 22/31 (just under 71%) is applied to offset tax on capital income.

• Any remaining amount after this is forfeited.

Please note that any refund depends on how much tax has been paid during the year and on the results of the tax assessment. A credit balance may be offset against other outstanding debts in accordance with applicable rules.

Applying for a refund of accumulated personal tax credit

If you have paid tax during the year but it is clear that part of your personal tax credit will remain unused at year-end, you may apply for a refund of the tax paid.

Further information on the application for a refund.