Iceland Personal Income Tax
Detailed personal income tax rates and rules for Iceland in 2026.
Icelandic income tax combines national tax and municipal tax. National tax has three brackets: 22.5% (income up to ISK 4,536,000), 29% (ISK 4,536,001-12,720,000), and 37.95% (above ISK 12,720,000). Municipal tax averages 14.45% (ranging from 12.44% to 14.52%). A personal tax credit of ISK 64,926/month offsets the tax on lower incomes. Combined rates shown include municipal tax.
| Income Range (ISK) | Tax Rate |
|---|---|
| ISK 0 – ISK 4.5M | 31.4% |
| ISK 4.5M – ISK 12.7M | 38.0% |
| ISK 12.7M+ | 46.3% |
Filing Deadline
March 14 of the following year (pre-filled returns)
Residency Rule
An individual is an Icelandic tax resident if they have a legal domicile in Iceland or stay for more than 183 days in any 12-month period. Residents are taxed on worldwide income.
Additional Notes
Iceland is not an EU member but participates in the EEA. The country has special provisions for the fishing and energy sectors. Iceland uses the Icelandic króna (ISK) and has capital flow management measures. A supplementary pension savings contribution of 4% (employee) is mandatory, with an employer contribution of 11.5%.
How Iceland Income Tax compares
Iceland’s top personal income tax rate of 46.3% is the 21st highest of 203 countries TaxAtlas tracks, above the global average of 27.7% and Europe’s regional average of 32%.
