Grundavdrag

Grundavdrag, or basic deduction, is a standard deduction in Sweden’s personal income tax system. It reduces the portion of earned income that is subject to taxation. The deduction applies automatically to individuals with earned income and is not available for purely capital income. The amount is set annually by the Swedish Tax Agency (Skatteverket) and is adjusted as part of the annual budget process.

The Grundavdrag increases with earned income up to a maximum level and is gradually phased out as income rises, so higher earners receive less or no Grundavdrag. The exact values are published in tax tables and on Skatteverket’s website. The purpose is to provide tax relief primarily to low- and middle-income earners and to work in concert with other reliefs such as jobbskatteavdrag—the earned income tax credit.

Relation to other reliefs: the Grundavdrag is a separate mechanism from other deductions and credits, and it reduces the tax burden on wage-earning individuals. It does not apply to passive income in the same way, and its interaction with other reliefs depends on the taxpayer’s overall income and situation. In practice, the deduction lowers the tax base used to determine payable tax, contributing to higher net income for those with earned income.

Administration and history: Grundavdrag has been a longstanding component of Sweden’s income tax system. It is generally applied automatically in the annual tax assessment, and taxpayers usually do not need to apply for it. The exact amount is reviewed annually as part of fiscal policy changes.

---