Notification must be sent as to which bracket income tax payments are to be in if the total income of the pension recipient, from the fund and others if appropriate, totals more than ISK 409,986 per month. The fund is responsible for paying the withholding tax, but each person has to let us know what percentage of the tax card they want to use with the fund.
In 2023, the personal tax allowance is ISK 59,665 per month, and the tax-free limit for pension recipients is ISK 189,714 per month.
Pensioners can use up to 100% of their spouse’s unused tax card for tax reduction. On the demise of a spouse, pension recipients can use the tax card of the deceased spouse for 9 months as of the month of passing.