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Iceland Personal Income Tax and Employer Contribution Changes for 2022 5 — Orbitax Tax News & Alerts

Iceland's government has announced the personal income tax changes in 2022. This includes the following annual brackets and rates:

  • up to ISK 4,445,783 - 31.45%
  • over ISK 4,445,783 up to ISK 12,481,275 - 37.95%
  • over ISK 12,481,275 - 46.25%

Note, the above rates include the average municipal tax rate of 14.45% that is applied in 2022 for employer withholding purposes.

Other related changes include that the annual personal discount is increased to ISK 646,993, up from ISK 609,509 in 2021. Further, the total employer contribution on payroll is increased to 6.35%, up from ISK 6.10% in 2021. The increased employer contribution is due to an increase in the general social security tax rate from 4.65% to 4.90%.

Further information on key rates and amounts for 2022 can be found on the Iceland Revenue and Customs website, in English and Icelandic (additional info provided).