• The full allowance is ISK 73,390.

• Those who received an allowance from TR for part of the year 2025 will receive a pro-rata payment based on the number of months they received the allowance.

• According to the law, the one-off payment is income-related. The annual exemption limit for it is ISK 1,200,000, but taxable income, such as employment income, pension fund payments and capital income, above the exemption limit will reduce the allowance by 3.3% until it is fully withdrawn.

• The one-off payment is not paid to those living abroad, and the person must have had legal residence in Iceland on 1 November 2025 to be entitled to it.

• This is not a taxable benefit, but it should be noted that while the one-off payment is not taxable, it is included in settlement-related payments in the TR settlement this spring.

Amount of the one-off payment based on the number of months with TR

Here you can see the amount of the one-off payment according to the number of months an individual had benefit rights during the year that meet the conditions for the one-off payment.

Number of months Amount

1 month 6,116 isk

2 months 12,232 isk

3 months 18,348 isk

4 months 24,463 isk

5 months 30,579 isk

6 months 36,695 isk

7 months 42,811 isk

8 months 48,927 isk

9 months 55,043 isk

10 months 61,158 isk

11 months 67,274 isk

12 months 73,390 isk

The one-off payment is cancelled at an annual income of ISK 3,423,930 or ISK 285,328 per month, excluding the allowance from TR.

Three examples of the lump-sum payment calculation:

Example 1

An individual with ISK 60,000 per month in income from a pension fund in addition to an allowance from TR and ISK 20,000 per month in capital income. The individual is married, and the capital income is therefore split equally between the spouses. The individual's monthly income is therefore ISK 70,000 per month.

Annual income: ISK 840,000.

Exemption limit: ISK 1,200,000.

Income exceeding the exemption limit: ISK 0.

Reduction due to income: ISK 0 (3.3% of ISK 0).

One-off payment: ISK 73,390.

Example 2

An individual with ISK 230,000 per month in income from a pension fund in addition to an allowance from TR and ISK 15,000 per month in capital income. The monthly income is therefore ISK 245,000.

Annual income: ISK 2,940,000.

Exemption limit: ISK 1,200,000.

Income exceeding the exemption limit: ISK 1,740,000.

Reduction due to income: ISK 57,420 (3.3% of ISK 1,740,000).

One-off payment: ISK 15,970 (ISK 73,390 – 57,420).

Example 3

An individual with ISK 260,000 per month in income from a pension fund in addition to an allowance from TR and ISK 70,000 per month in capital income. The individual is married, and the capital income is therefore split equally between the spouses. The individual's monthly income is therefore ISK 295,000 per month.

Annual income: ISK 3,540,000.

Exemption limit: ISK 1,200,000.

Income exceeding the exemption limit: ISK 2,340,000.

Reduction due to income: ISK 77,220 (3.3% of ISK 2,340,000).

Entitlement to allowance: ISK 0 (ISK 3,830 over the base amount, and therefore there is no entitlement to an allowance).

Example 4

An individual with ISK 285,328 per month in income from a pension fund in addition to a monthly allowance from TR.

Annual income: ISK 3,423,936.

Exemption limit: ISK 1,200,000.

Income exceeding the exemption limit: ISK 2,223,936.

Reduction due to income: ISK 73,390 (3.3% of ISK 2,223,936).

One-off payment: ISK 0 (73,390 – 73,390).