Figures and dates
Figures for the self-employed in Iceland 2026
One page with every reference figure a contractor needs in 2026. Each figure has a source, and we update the page when Skatturinn publishes new amounts.
- Updated
- Sources reviewed
- Tax year
- 2026
In 2026, withholding tax in Iceland is 31.49% on monthly income up to 498,122 ISK, 37.99% on income above that up to 1,398,450 ISK, and 46.29% beyond. The personal tax credit is 72,492 ISK per month. Social security (tryggingagjald) is 6.35%, mandatory pension contributions total 15.5% (4% + 11.5%) and VAT is 24% or 11%. VAT registration becomes mandatory at 2,000,000 ISK of turnover in any 12 months.
Key figures
- Tax brackets
- 31.49% / 37.99% / 46.29%
- limits 498,122 and 1,398,450 ISK/month
- Personal tax credit
- 72,492 ISK/month
- 869,898 ISK/year
- Social security
- 6.35%
- 4.90 + 1.35 + 0.05 + 0.05
- Pension
- 15.5%
- 4% + 11.5%
- VAT
- 24% / 11%
- registration at 2,000,000 ISK turnover
- Rehabilitation fund
- 0.10%
- of salary
Withholding tax on income 2026
| Bracket | Monthly income | Annual income | Rate |
|---|---|---|---|
| 1 | 0–498,122 ISK | 0–5,977,464 ISK | 31.49% |
| 2 | 498,123–1,398,450 ISK | 5,977,465–16,781,400 ISK | 37.99% |
| 3 | above 1,398,450 ISK | above 16,781,400 ISK | 46.29% |
The rates are withholding rates that include the average municipal tax (útsvar). Your final municipal tax depends on your municipality and is settled at assessment. The brackets apply to taxable income, that is salary or calculated remuneration less pension contributions. See tax brackets.
Personal tax credit 2026
| Amount | |
|---|---|
| Per month | 72,492 ISK |
| Per year | 869,898 ISK |
The credit is deducted from the calculated tax, not from income. Unused credit accumulates within the year, and spouses or registered partners taxed jointly can use each other's credit. See personal tax credit.
Social security (tryggingagjald) 2026
| Component | Rate |
|---|---|
| General social security | 4.90% |
| Unemployment insurance | 1.35% |
| Wage Guarantee Fund | 0.05% |
| Market fee | 0.05% |
| Total | 6.35% |
The base is salary or calculated remuneration plus the employer's pension contribution. It is reported on the monthly withholding return. See social security.
Pension contributions
| Component | Rate |
|---|---|
| Employee contribution (mandatory) | 4% |
| Employer contribution (mandatory) | 11.5% |
| Mandatory total | 15.5% |
| Additional pension savings, employee (optional) | 2–4% |
| Employer match on additional savings | 2% |
The self-employed pay both parts themselves on calculated remuneration. The rehabilitation fund (VIRK) levy is 0.10% of salary, paid by the employer. See pension.
Value added tax
| Value | |
|---|---|
| Standard rate | 24% |
| Reduced rate | 11% |
| Registration threshold | turnover above 2,000,000 ISK in 12 months |
| Reporting period | two months |
| Due date | the 5th of the second month after the period ends |
The reduced rate covers, among other things, accommodation, food, books, magazines and passenger transport in tourism. See VAT and the tax calendar.
Fustle prices the figures meet
| Plan | Price |
|---|---|
| Invoicing | 1,990 ISK/month + VAT |
| Invoicing + Expenses | 4,990 ISK/month + VAT |
| Payroll — fixed | 10,900 ISK/month + VAT |
| Payroll — flexible | 4% of payments received, max 13,900 ISK/month + VAT |
Try the payroll calculator to see how the figures above turn into net salary.
Change log
- 30 September 2026 — page created with the 2026 tax-year figures, checked against Skatturinn.
Frequently asked questions
When do the figures change?
Skatturinn publishes the tax brackets, personal tax credit and calculated-remuneration reference amounts for a new tax year in December or January. The social security rate is set in law and VAT rates rarely change. We update the page and note the change in the change log.
Are the brackets applied before or after pension contributions?
After. Taxable income is salary less the 4% mandatory contribution and up to 4% additional pension savings. The brackets apply to that base.
What about my municipal tax?
The withholding rates include the average municipal tax. If your municipality charges more or less, the difference is settled at the annual assessment.
Sources
- Skatturinn — staðgreiðsla 2026: skattþrep og persónuafslátturskatturinn.is/einstaklingar/stadgreidsla/stadgreidsla/2026
- Skatturinn — tryggingagjaldskatturinn.is/atvinnurekstur/skattar-og-gjold/tryggingagjald
- Skatturinn — almennt um virðisaukaskattskatturinn.is/atvinnurekstur/virdisaukaskattur/almennt-um-vsk/
- Skatturinn — skráning á virðisaukaskattsskráskatturinn.is/atvinnurekstur/virdisaukaskattur/skraning-a-vsk-skra
- Lífeyrismál.is — sjálfstætt starfandi, spurt og svaraðlifeyrismal.is/is/spurt-og-svarad/sjalfstaett-starfandi
- Lög um tekjuskatt nr. 90/2003althingi.is/lagas/nuna/2003090.html
- Lög um tryggingagjald nr. 113/1990althingi.is/lagas/nuna/1990113.html
- Lög um skyldutryggingu lífeyrisréttinda nr. 129/1997althingi.is/lagas/nuna/1997129.html
- Lög um virðisaukaskatt nr. 50/1988althingi.is/lagas/nuna/1988050.html
General information, not advice on your situation. Skatturinn and other authorities assess each case. Check the review date and sources before relying on a figure.
Related content
- TaxesTax brackets 2026: how income tax is applied in stepsThe 2026 tax brackets: 31.49% up to 498,122 ISK per month, 37.99% up to 1,398,450 ISK and 46.29% above. How brackets work, marginal versus average tax, municipal tax and examples for contractors.
- TaxesPersonal tax credit: what it is and how to use itThe personal tax credit in 2026 is 72,492 ISK per month and 869,898 ISK per year. How it is deducted from tax, how it is split between employers, accumulation within the year, transfer between spouses and what the self-employed need to know.
- Contributions and pensionGive social security contributions their own line.Understand tryggingagjald, its place in payroll and the records you need to review calculations, filings and payments for your business.
- Contributions and pensionGive your pension a clear place in your routine.Organise your pension fund details, contribution records and payments when working independently. Understand your responsibilities and Fustle’s role.
- VATValue added tax (VAT) for the self-employedValue added tax for the self-employed in Iceland: when registration becomes mandatory (2,000,000 ISK turnover), when 24% or 11% applies, what is exempt, how input VAT is deducted and the VAT return due dates.
- Figures and datesTax calendar for the self-employed in IcelandEvery deadline the self-employed in Iceland need in 2026: withholding tax and social security by the 15th of each month, VAT every two months, pension contributions, wage statements and the annual tax return.
- CalculatorsPayroll calculator for contractorsCalculate what you take home from an invoice as a contractor in Iceland in 2026, or what you need to invoice for a target salary. Tax brackets, personal tax credit, pension and social security in one calculation.
Where does Fustle fit in?
Record the work and create the invoice. The service you choose determines the support included.