Iceland’s tax authority has announced the 2026 rates, covering corporate tax, VAT, and personal income.
Iceland’s tax authority, the Revenue and Customs, has released the key rates and amounts for 2026, detailing changes to corporate tax, VAT, and personal income tax.
The rate changes are as follows:
Corporate tax rate changes
| Income tax at the general level (limited liability companies, private limited companies, etc.) | 20% |
| Income tax at the upper level (partnerships, estates, bankruptcies, etc.) | 37.60% |
Value added tax (VAT) changes
| Standard rate | Reduced rate | |
| VAT rates | 24% | 11% |
| VAT calculated from the total price
(price includes VAT) |
19.35% | 9.91% |
Capital gains tax changes
Iceland levies a 22% capital gains tax on interest, dividends, and capital gains from listed companies, with a tax-free allowance of 300,000 ISK per person (600,000 ISK for couples). Rental income from up to two residential properties under the Tenancy Act is taxed as capital income at 75% of the rental amount, with no deductions.
Personal tax rate changes
The monthly tax brackets and rates for 2026 are as follows:
| ISK 0 – 498,122 per month | 31.49% |
| ISK 498,123 – 1,398,450 ISK per month | 37.99% |
| Above ISK 1,398,450 ISK per month | 46.29% |
