Key rates and amounts 2022

Individuals: Withholding tax 2022

Income from 0 – 370.482 ISK per. month   31,45%
Income from 370.483 - 1.040.106 ISK per. month   37,95%
Income exceeding 1.040.106 ISK per month
(only on the amount that exceeds the income threshold)
  46,25%
Children (born 2007 or later) on income exceeding 180.000 ISK per year   6%
Personal tax credit per month ISK 53.916
Personal tax credit per year ISK 646.993

A list of municipal tax rates is available on the website of Icelandic Association of Local Authorities (only available in Icelandic).

More information regarding tax liability

More information on personal tax credit

Value added tax (VAT)

  Standard rate Reduced rate
VAT rates 24% 11%
VAT calculated from total price
(price includes VAT)
19,35% 9,91%

Payroll tax

Employers pay the payroll tax based on the employee's wages.

General payroll tax  
2022 6,35%
2021 6,10% 
2020 6,35%
2019 6,60%
2018 6,85%
2017 6,85%

Capital gains tax

Capital gains tax for individuals is 22%

This applies to all capital gains such as sales profits, dividends and interests. However, there is a ISK 300.000 tax-free limit per person, on interests and income from shareholdings in the form of dividends and capital gains in companies listed on a regulated securities market or a market for financial instruments .

Rental income of residential properties are considered to be capital gains, that is if you rent out no more than two properties which fall under the Icelandic residential rental law. If those conditions are met 50% of the rental, income is tax free and without any deductions.

Icelandic National Broadcasting Service fee (útvarpsgjald)

Year   Amount Annual income threshold
Tax assessment 2022 ISK 18.800 1.938.025
Tax assessment 2021 ISK 18.300 1.870.828 
Tax assessment 2020 ISK 17.900 1.833.671
Tax assessment 2019 ISK 17.500 1.750.783
Tax assessment 2018 ISK 17.100 1.718.678
Tax assessment 2017 ISK 16.800 1.678.001
Tax assessment 2016 ISK 16.400 1.637.600

More information about the Icelandic National Broadcast Service fee

The Senior Citizen's Construction Fund fee

Year   Amount Annual income threshold
Tax assessment 2022 ISK 12.334 1.938.025
Tax assessment 2021 ISK 12.034 1.870.828 
Tax assessment 2020 ISK 11.740 1.833.671
Tax assessment 2019 ISK 11.454 1.750.783
Tax assessment 2018 ISK 11.175 1.718.678
Tax assessment 2017 ISK 10.956 1.678.001
Tax assessment 2016 ISK 10.464 1.637.600

More information about the Senior Citizen‘s Construction Fund fee

Per diem payments for domestic travel

    January - May
Accommodation and transportation (24 hours) ISK 30.700    
Accommodation (24 hours) ISK 17.700

Transportation - whole day trip (minimum10 hours) ISK 13.000

Transportation - half a day trip (minimum 6 hours) ISK 6.500

Per diem payments for international travel

    General per diem payments
Jan-   Accommodation Other  
Category 1 SDR 208 125 Moscow, Singapore, New York City, Tokyo, Washington DC.
Category 2 SDR 177 106 Dublin, Istanbul, Japan (except Tokyo), London, Luxemburg, Mexico City, Seoul
Category 3 SDR 156 94 Amsterdam, Athens, United States (except New York City and Washington DC), Helsinki, Barcelona, Geneva, Hong Kong, Canada, Copenhagen, Madrid, Oslo, Paris, Rome, Stockholm, Vienna
Category 4 SDR 139 83 Other destinations

Car allowance

For driving one's personal vehicle for the employer

0-1.000 km. ISK 120   
1.001-2.000 km. ISK 118
2.001-3.000 km. ISK 116
3.001-4.000 km. ISK 102
4.001-5.000 km. ISK 99

Lodging tax

Due to the corona virus pandemic lodging tax will be temporarily abolished from 1. April 2020 to 31. December 2023 for the lodging services provided within that period.

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