Personal tax credit between spouses

Married couples and cohabiting partners who are taxed jointly may use each other’s personal tax credit, for example if one spouse does not have regular income.

The personal tax credit may be shared as needed, but the permitted maximum for shared use is twice the individual limit. See the permitted maximum usage by month.

To use a spouse’s personal tax credit, you must inform the employer, including how much of the credit is to be used and from which date.

If a spouse has accumulated personal tax credit, it may be used, but care must be taken not to exceed the annual permitted limit.

Information on the use of the personal tax credit can be obtained from the Skatturinn's service portal and sent to the employer. If the personal tax credit is already being shared, the overviews of both spouses need to be reviewed (see below).

Stop using spouse’s personal tax credit

If one spouse or jointly taxed partner (Spouse A) has used the other spouse’s personal tax credit (Spouse B) during the year but now wants to stop, it is important to ensure that employers are properly informed.

The following should be considered:

• Inform Spouse A’s employer to stop using the personal tax credit from a specified date.

• Check whether any personal tax credit remains unused.

• Inform Spouse B’s employer that the personal tax credit may be used from a specified date.

• Inform Spouse B’s employer of the current usage status. It is important to review the personal tax credit usage overview for both Spouse A and Spouse B to obtain a complete and accurate picture.

Understanding the overviews correctly

Please note that because the personal tax credit usage overview on the Skatturinn's service portal shows only the individual’s usage, it may give a misleading picture in cases of joint taxation. In such cases, one spouse (Spouse A) may be shown as exceeding the personal tax credit limit, while the other spouse (Spouse B) is shown with a corresponding accumulated personal tax credit. The final settlement will be made at the end of the year.

In the example above, Spouse B must therefore ensure that the employer has the correct information about the situation when the change is made.

Application for joint taxation in a new cohabitation

Individuals in unmarried cohabitation may apply for joint taxation and thereby use each other’s personal tax credit. If cohabiting partners have already applied for joint taxation in their tax return, there is no need to apply again.

Married couples are always taxed jointly and do not need to apply.

Applicants must be registered as cohabiting partners in the National Registry and meet one of the following conditions:

• The cohabitation has lasted continuously for 12 months or longer

• The applicants have a child together

• The applicants are expecting a child together

Permission for joint taxation and the use of a spouse’s personal tax credit during the withholding tax year is granted on a provisional basis. Final use of the personal tax credit at assessment depends on a joint tax return having been filed and on the conditions for joint taxation being met.

How is the personal tax credit settled for jointly taxed couples?

At the tax assessment, after tax returns have been filed, the following applies: