Tekjuskattur

Tekjuskattur is the Icelandic term for income tax, the primary levy on personal income in Iceland. The system for individuals consists of two components: ríkisinntekjuskattur (national income tax) and sveitarskattur (municipal tax). The national tax is progressive, applying higher rates to higher income levels, while the municipal tax is a flat rate set by each municipality and added to the national tax to form the total liability. Taxpayers are typically residents taxed on their worldwide income; non-residents are taxed only on Iceland-sourced income.

The tax base includes wages and salaries, business income, and certain types of capital income. There are allowances, credits, and deductions that reduce liability. The most notable are a personal tax credit (persónuafsláttur) and, where applicable, child or dependent credits; deductions may cover pension contributions and other eligible expenses.

Tax is usually collected through withholding by employers, with an annual tax return filed with the Icelandic Tax Administration (Skatturinn) to settle any remaining liability or entitlement to a refund. The tax year follows the calendar year, with returns and payments due in the following year, subject to prepayment rules.

Rates and rules are periodically updated by legislation and administered by Skatturinn. For current rates, exemptions, and filing deadlines, reference is made to the official guidance from Skatturinn.