Key rates and amounts 2023

Individuals: Withholding tax 2023

Income from 0 – 409,986 ISK per. month 31.45%
Income from 409,987 - 1,151,012 ISK per. month 37.95%
Income exceeding 1,151,012 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 monthISK59,665
Personal tax credit per yearISK715,981

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

More information on tax brackets

Value added tax (VAT)

Standard rateReduced rate
VAT rates24%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
2023 6.35% 
20226.35%
20216.10%
20206.35%
20196.60%
20186.85%
20176.85%

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 tax-free limit of ISK 300,000 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 is 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 AmountAnnual income threshold
Tax assessment 2023ISK20,2002,057,211
Tax assessment 2022ISK18,8001,938,025
Tax assessment 2021ISK18,3001,870,828
Tax assessment 2020ISK17,9001,833,671
Tax assessment 2019ISK17,5001,750,783
Tax assessment 2018ISK17,1001,718,678
Tax assessment 2017ISK16,8001,678,001
Tax assessment 2016ISK16,4001,637,600

More information about the Icelandic National Broadcast Service fee

The Senior Citizen's Construction Fund fee

Year AmountAnnual income threshold
Tax assessment 2023ISK13,2842.057.211
Tax assessment 2022ISK12,3341,938,025
Tax assessment 2021ISK12,0341,870,828
Tax assessment 2020ISK11,7401,833,671
Tax assessment 2019ISK11,4541,750,783
Tax assessment 2018ISK11,1751,718,678
Tax assessment 2017ISK10,9561,678,001
Tax assessment 2016ISK10,4641,637,600

More information about the Senior Citizen‘s Construction Fund fee

Per diem payments for domestic travel

Jan.- AprilMay - Oct.Nov. - Dec. 
Accommodation and transportation (24 hours)ISK34,500  39,500 38,500
Accommodation (24 hours)ISK20,400 34,300 22,600
Transportation - whole day trip (minimum10 hours)ISK14,100 15,200 15,900
Transportation - half a day trip (minimum 6 hours)ISK7,050 7,600 7,950

Per diem payments for international travel

General per diem payments
Jan- AccommodationOther
Category 1SDR208125Moscow, Singapore, New York City, Tokyo, Washington DC.
Category 2SDR177106Dublin, Istanbul, Japan (except Tokyo), London, Luxemburg, Mexico City, Seoul
Category 3SDR15694Amsterdam, Athens, United States (except New York City and Washington DC), Helsinki, Barcelona, Geneva, Hong Kong, Canada, Copenhagen, Madrid, Oslo, Paris, Rome, Stockholm, Vienna
Category 4SDR13983Other destinations

Car allowance

For driving one's personal vehicle for the employer

0-1,000 km.ISK 134
1,001-2,000 km.ISK 129
2,001-3,000 km.ISK 124
3,001-4,000 km.ISK 120
4,001-5,000 km.ISK 116

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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