What is a personal tax credit (persónuafsláttur/skattkort)?

What is a personal tax credit (persónuafsláttur/skattkort)?

In Iceland, you get a personal tax credit, which is a tax deduction you can use to lower the tax withheld from your salaries. If you are 16 years and older and living in Iceland, you receive a personal tax credit.

In 2025, the personal tax credit is 68,691 kr per month (or 824,288 kr annually). You can use your unused personal tax credit for your contractor work; just let us know how much.

If you have multiple employers, it's crucial to coordinate, and it's usually best to use the full personal tax credit with only one employer to avoid over‑utilization.

• Unused credit: Personal tax credits that are not used in one month accumulate and can be used later within the same calendar year. Instructions here: skatturinn.is
• No carry‑over: Accumulated personal tax credit does not transfer from one year to the next.
• Spousal transfer: Unused personal tax credits are transferable in full between married couples and cohabiting partners within the same calendar year.
• Over‑utilization: If you use too much personal tax credit (e.g., by claiming it with multiple employers without proper coordination), you will likely owe the difference when your final tax assessment is made the following year.

When you fill out your information on our site, you can add how much personal tax credit you would like to use (0% or 100%) and if you have any unused amount.

If you have any questions about using your personal tax credit for your contract work, email us at info@freelancepay.is.