Sweden plans tax cuts totalling nearly SEK 21.4 billion, including larger earned income credits, higher basic allowances for seniors, and expanded relief for sickness and activity compensation, resulting in annual reductions of approximately SEK 1,800–3,800 for affected individuals.
Sweden’s government plans to introduce significant tax reductions in the 2026 Budget, set to take effect on 1 January 2026. These measures aim to ease the financial burden on workers, pensioners, and individuals receiving sickness or activity compensation.
Full-time workers’ tax cuts
For full-time workers with low to middle incomes, the ordinary earned income tax credit will be expanded by SEK 17.36 billion. This adjustment is expected to provide an average annual tax reduction of approximately SEK 3,800 per person.
Pensioners tax cuts
Pensioners aged 66 and older will benefit from an increase in the basic allowance, amounting to SEK 4.04 billion, resulting in an average annual tax cut of approximately SEK 2,300 per individual.
Individuals receiving sickness/activity compensation
Additionally, individuals receiving sickness or activity compensation with annual incomes exceeding SEK 54,000 will see a targeted tax reduction. This adjustment aims to align their tax rates more closely with those of wage earners in similar income brackets, resulting in an average annual tax cut of approximately SEK 1,800.
These proposals are expected to take effect for the 2026 tax year, starting after 31 December 2025.
