Key rates and amounts 2025

Individuals: Withholding tax 2025

Income from 0 – 472,005 ISK per. month   31.49%
Income from 472,005 - 1,325,127 ISK per. month   37.99%
Income exceeding 1,325,127 ISK per month
(only on the amount that exceeds the income threshold)
  46.29%
Children (born 2010 or later) on income exceeding 180,000 ISK per year   6%
Personal tax credit per month ISK 68,691
Personal tax credit per year ISK 824,288

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 rate Reduced rate
VAT rates 24% 11%
VAT calculated from total price
(price includes VAT)
19.35% 9.91%

Payroll tax

Capital gains tax

Icelandic National Broadcasting Service fee (útvarpsgjald)

The Senior Citizen's Construction Fund fee

Per diem payments for domestic travel

Per diem payments for international travel

Car allowance