Here is a breakdown of the 2026 personal income tax brackets for Iceland, shown in ISK.
| Taxable income | Rate |
|---|---|
| kr0 – kr5,977,464 | 31.49% |
| kr5,977,464 – kr16,781,400 | 37.99% |
| Over kr16,781,400 | 46.29% |
How brackets work
A progressive bracket system only taxes the portion of income that falls inside each band at that band's rate — not your entire income at the top rate you reach. For example, if the first kr5,977,464 of income is taxed at a lower rate, only income above that threshold is taxed at the next rate up.
Worked example: kr16,781,400 income
- kr0–kr5,977,464 at 31.49% → kr1,882,303
- kr5,977,464–kr16,781,400 at 37.99% → kr4,104,415
- Total estimated tax: kr5,986,719 (35.7% effective rate)
This is the estimated tax before any deductions or credits are applied — see the deductions guide for what could lower this further. Run your own numbers with the calculator above to see exactly how much of your income falls into each bracket.
Always verify current-year brackets with Iceland's tax authority before filing.