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Income tax brackets

The withholding tax deducted on wages is in three tax brackets. Individuals with payments from more than one employer need to make arrangements to ensure that the correct percentage of tax is deducted from their wages, to avoid tax debt at the end of year in the tax assessment.

The tax rate for 2024 is as follows:

Tax bracket

Income

Percentage

Tax bracket 1

On income 0 - 446,136. kr.

31,48%

Tax bracket 2

On income 446,137 - 1,252,501 kr.

37,98%

Tax bracket 3

On income above 1,252,501 kr.

46,28%

Responsibility for correct information

It is the responsibility of each individual to provide their employer with correct information to ensure that the correct tax percentage is deducted from the salary and that the use of the personal tax credit is correct.

If the monthly salary exceeds ISK 446,136 from one employer, salary from any other employer must be taxed in a higher tax bracket. If the monthly salary exceeds ISK 1,252,501, the amount that exceeds that threshold must be taxed in tax bracket three.

Tax brackets examples