- Top income tax rate 46.2 46.29
- Income tax brackets updated
Refreshed to 2026 — brackets, top PIT, WHT, personal tax credit, treaty count, sources and verification date Source
IS
Iceland
IS · ISL · #106 · 12 cities
Nomad score
51/100
Compare
Top income tax
46.3%
Worldwide system
Corporate tax
20.0%
VSK
24.0%
standard rate
Tax residency
183 days
42 tax treaties
Iceland tax profile
Data year: 2026
- Tax system
- Worldwide Residents are taxed on worldwide income. Withholding on wages uses three progressive brackets combining national income tax and municipal tax; withheld municipal tax uses the 14.94% average rate (actual municipal rates range from 12.44% to 14.94% in the final assessment).
- Top PIT rate
- 46.3%
- Corporate tax rate
- 20.0%
- VSK
- 24.0%
- Capital gains tax
- 22.0% 22% flat on capital income including gains. ISK 300,000 per person per year is tax-free for interest and for dividends or gains on shares listed on a regulated market.
- Social security (employee)
- 4.0%
- Social security (employer)
- 6.4%
- Dividend withholding
- 20.0%
- Interest withholding
- 12.0%
- Royalty withholding
- 20.0%
- Inheritance tax
- 10.0%
- Treaty count
- 42
Income tax brackets
Personal income
| Bracket min | Bracket max | Rate |
|---|---|---|
| ISK 0 | ISK 5,977,464 | 31.5% |
| ISK 5,977,464 | ISK 16,781,400 | 38.0% |
| ISK 16,781,400 | and above | 46.3% |
Tax flags
Participation Exemption
Tax residency
- Days threshold
- 183 days
- Residency rules
- Resident if present in Iceland more than 183 days in any 12-month period (from date of arrival). Former domiciles can remain fully liable for three years after leaving unless they prove tax residence elsewhere.
- Exit tax
- No
- CFC rules
- Yes CFC rules for low-taxed controlled entities.
Filing information
- Fiscal year
- 01-01 – 12-31
- Filing deadline
- March 14
Sources
- Skatturinn — Tax brackets 2026 (accessed Oct 9, 2026) Withholding PIT brackets and combined rates
- Skatturinn — Key rates and amounts 2026 (accessed Oct 9, 2026) VAT, payroll tax, capital gains, personal tax credit
- Skatturinn — Dividends (accessed Oct 9, 2026) Dividend WHT on non-resident companies
- Skatturinn — Interests (accessed Oct 9, 2026) Interest WHT and DTA interest annex (treaty count)
- PwC Iceland — Taxes on personal income (accessed Oct 9, 2026) Annual bracket amounts, state and municipal split
- PwC Iceland — Residence (accessed Oct 9, 2026) 183-day residency test and post-departure liability
- PwC Iceland — Withholding taxes (accessed Oct 9, 2026) Non-resident WHT on royalties; treaty partner list cross-check