Taxation of Pension Payments

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 446,136 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 2024, the personal tax allowance is ISK 64,926 per month, and the tax-free limit for pension recipients is ISK 206.245 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.

RSK: Detailed information on taxes and their payment.

On the first ISK 446,136 per month
On an amount from ISK 446,137 to 1,252,501/month
On an amount over ISK 1.252.501/month