Participation in accommodation costs in residential and nursing facilities
Calculation of participation in accommodation costs in residential and nursing facilities
Participation in accommodation costs in residential and nursing facilities depends on an individual's income after tax.
This is how we calculate it for the year 2026.
Income that affects the calculation
All income from pension funds is included. No exemption limit applies to it.
All capital income is included, but its exemption limit is ISK 8220 a month or ISK 98,640 a year.
The capital income of a married couple is divided equally between them. Therefore, 50% of the income is attributed to each of them.
The exemption limit for employment income is ISK 109.600 a month or ISK 1,315,200 a year.
Income that does not affect the calculation
The following allowances are not included:
allowances from TR,
allowances according to the Social Assistance Act,
financial assistance from municipalities,
withdrawal of additional pension savings.
How is the participation calculated?
First, the reference income is determined:
Exemption limits are deducted from employment income and capital income.
Tax is calculated on the income included in the reference income.
Tax is calculated according to the income tax percentage (see table below) and maximum municipal tax.
The full personal tax credit is deducted from the calculated tax.
Capital gains tax is calculated on capital income after the exemption limit has been deducted.
If the personal tax credit is not fully utilized, 22/37 of the unused personal tax credit may be used to reduce capital gains tax.
The calculated tax is finally deducted from the income.
The remaining amount is called reference income.
How much is the participation?
The institutional exemption limit for the year 2026 is ISK 140,045.
The institutional exemption limit is deducted from the reference income.
The amount that then remains is the individual's participation in accommodation costs.
If the reference income is lower than the institutional exemption limit, the individual pays nothing towards accommodation costs.
Special rule for married couples
If an individual is in residential care but their spouse continues to live at home, they pay 70% of the calculated participation in accommodation costs.
Example of calculation
Service provider
Social Insurance Administration