Tax System Overview
A community-curated guide by Iranian-Icelandic Community
Income Tax
Iceland's welfare state is funded through taxes. All residents earning income must pay income tax. On average about 37.4% of income goes toward taxes and wage-related expenses. The tax rate is progressive. File your annual tax declaration in March each year at www.skattur.is.
Annual Tax Declaration
All residents must submit a tax return in March. Tax authorities evaluate the information, calculate owed taxes, and determine eligibility for family housing benefits and child allowances based on income and assets. Most residents receive a refund or owe a small amount.
Tax Card (Skattspjald)
Request your tax card at the Directorate of Internal Revenue (www.rsk.is). Your employer uses your tax card to calculate the correct tax deductions from your salary. Without a tax card, the maximum tax rate is applied. Spouses and registered partners may use each other's unused personal tax allowance.