Personal Income Tax in Denmark in 2026: Rates, Deductions and Rules
Comprehensive guide to Danish personal taxation: progressive rates up to 60.5%, deductions, AM-bidrag, and 2026 tax reform changes for residents and expats.
Denmark's tax system is known for its high rates and progressive structure, funding one of the world's most comprehensive welfare states. The 2026 tax reform introduces significant changes with new middle, top, and top-top tax brackets, increased deductions, and a more accessible expat scheme. Whether you're a resident, expat, or considering moving to Denmark, understanding these changes is crucial for your financial planning.
2026 Tax Reform: Major Changes
What's New in 2026
New Tax Brackets Replace Old Top Tax
The old 15% top tax is split into three brackets: middle tax (7.5%), top tax (7.5%), and top-top tax (5%). This reduces taxes for most high earners while increasing them for the highest income group.
Increased Thresholds (4.8% Adjustment)
All tax thresholds and deductions increased by 4.8% following wage growth indexation, providing tax relief for most income levels.
Expat Scheme Now More Accessible
Minimum salary requirement reduced from 78,000 DKK to 65,400 DKK per month, allowing significantly more foreign workers to qualify for the flat 32.84% rate.
Higher Employment Deduction
Maximum employment deduction increased to 63,300 DKK (from 55,600 DKK), saving approximately 2,000 DKK in taxes annually for full-time workers.
Who Benefits Most?
Around 300,000 Danes earning between 35,000-80,000 DKK/month (420,000-960,000 DKK/year) will see the largest tax reductions, saving up to 14,700 DKK annually. Those earning above 2.8 million DKK will face higher marginal rates.
Tax Rates and Structure for 2026
Tax Components
Danish income tax consists of multiple layers applied sequentially
| Tax Component | Rate | Applied To |
|---|---|---|
| Labour Market Tax (AM-bidrag) | 8% | Gross personal income (deducted first) |
| Bottom Tax (bundskat) | 12.01% | Income above personal allowance |
| Municipal Tax (kommuneskat) | ~25.05% | Average rate (22-27% by municipality) |
| Middle Tax (mellemskat) | 7.5% | Income above 641,200 DKK (after AM) |
| Top Tax (topskat) | 7.5% | Income above 777,900 DKK (after AM) |
| Top-Top Tax (toptopskat) | 5% | Income above 2,592,700 DKK (after AM) |
| Church Tax (optional) | ~0.64% | For Lutheran Church members only |
Maximum marginal rate: 60.5% for top-top bracket (including AM-bidrag but excluding church tax)
Income Thresholds Before AM-bidrag
For salary planning, these are the gross income thresholds before the 8% AM deduction:
Middle Tax
696,956 DKK
≈ 58,080 DKK/month
Top Tax
845,652 DKK
≈ 70,471 DKK/month
Top-Top Tax
2,818,152 DKK
≈ 234,846 DKK/month
Deductions and Allowances
Personal Allowance (Personfradrag)
Single Person
54,100 DKK
Tax-free income threshold
Married Couple
108,200 DKK
Combined allowance
This allowance is automatically applied to all taxpayers and means you don't pay tax on the first 54,100 DKK of your income.
Employment Deduction (Beskæftigelsesfradrag)
Maximum: 63,300 DKK (2026)
Increased from 55,600 DKK in 2025 - saving ~2,000 DKK in taxes
This deduction is applied automatically to all employment income and reduces your taxable income. It recognizes work-related expenses and encourages workforce participation.
Other Common Deductions
Commuting Expenses
2.28 DKK per km for distances 25-120 km, 1.14 DKK per km above 120 km. Maximum annual deduction: 34,400 DKK.
Union Membership Fees
Maximum 7,000 DKK per year for professional associations and unemployment insurance contributions.
Pension Contributions
Contributions to approved pension schemes are deductible, reducing taxable income and providing tax benefits.
Domestic Services
Home cleaning, maintenance, and care services: maximum deduction 18,300 DKK per year.
Interest on Loans
Interest paid on mortgages and other loans is deductible from capital income.
Expat Tax Scheme (48E / Researcher Scheme)
Special Flat Tax for Foreign Workers
Tax Rate
Composed of 27% income tax + 8% AM-bidrag
Duration
Maximum period (84 months)
2026 Update: Lower Salary Threshold
Previous (2025):
78,000 DKK/month
New (2026):
65,400 DKK/month
This substantial reduction makes the scheme accessible to significantly more foreign workers and researchers.
Key Benefits:
Much lower effective tax rate compared to standard progressive rates
Simplified tax filing - no deductions needed or allowed
Available to both employees and researchers/scientists
Must apply before or shortly after starting employment in Denmark
Important Notes
After the 7-year period ends, you'll be taxed at ordinary progressive rates. The scheme only applies to employment income - other income (rental, investments) is taxed normally. No deductions can be claimed against income taxed under this scheme.
Investment Income and Share Taxation
Share Income Tax (Aktieindkomst)
Dividends and capital gains on shares are taxed separately from personal income at progressive rates:
Lower Rate
27%
On first 79,400 DKK (2026)
158,800 DKK for married couples
Higher Rate
42%
On amounts above 79,400 DKK
Total effective rate including corporate tax: When including the 22% corporate tax paid at company level, the total effective taxation on dividends reaches approximately 44.9% (lower rate) or 54.8% (higher rate).
Capital Income (Kapitalindkomst)
Interest income, interest expenses, and net capital gains (excluding shares) are taxed as capital income:
Positive Capital Income
Taxed at up to 42% (bottom tax, municipal tax, and middle tax apply)
Negative Capital Income
Deductible but with reduced effect (maximum deduction value varies by income level)
Tax Filing and Compliance
How Taxes Are Collected
Withholding at Source (A-skat)
Employers automatically deduct income tax and AM-bidrag from your salary each month based on your tax card. This preliminary tax covers most of your annual tax liability.
Pre-Filled Tax Return
Around March, you receive a pre-filled tax return (årsopgørelse) with all income and deductions reported by employers, banks, and other institutions.
Review and Submit
Check the pre-filled information, make corrections if needed, and submit through TastSelv at skat.dk. If everything is correct, no action is required.
Filing Deadline
May 1
Standard deadline. Extension to July 1 available upon request for complex situations.
Online Platform
All tax filing is done online through TastSelv at skat.dk. Available in English for international residents.
Visit TastSelvTax Settlement (Slutskat)
After you file your return, SKAT processes it and issues a final tax assessment (årsopgørelse):
Tax Refund (Til gode)
If you paid too much preliminary tax, you'll receive a refund typically paid directly to your bank account.
Additional Tax (Restskat)
If you paid too little, you'll need to pay the difference, typically in three installments.
Frequently Asked Questions
What are the income tax rates in Denmark for 2026?+
Denmark has a progressive tax system with multiple components: 8% labour market tax (AM-bidrag), 12.01% bottom tax, average 25.049% municipal tax, plus three additional brackets - middle tax (7.5% above 641,200 DKK), top tax (7.5% above 777,900 DKK), and top-top tax (5% above 2,592,700 DKK). Maximum marginal rate reaches 60.5%.
What is the personal allowance in Denmark for 2026?+
The personal allowance (tax-free income threshold) for 2026 is 54,100 DKK for single taxpayers and 108,200 DKK for married couples. This amount is automatically deducted from your taxable income.
How does the employment deduction work in Denmark?+
The employment deduction is 12.75% of your personal income with a maximum of 63,300 DKK in 2026 (increased from 55,600 DKK in 2025). This deduction is applied automatically to reduce your taxable income and benefits all employed individuals.
What is the Danish expat tax scheme and who qualifies?+
The expat tax scheme (also called researcher scheme) offers a flat 32.84% tax rate (27% + 8% AM-bidrag) for up to 7 years. For 2026, the minimum salary requirement is lowered to 65,400 DKK per month (from 78,000 DKK in 2025), making it accessible to more foreign workers.
How are dividends and investment income taxed in Denmark?+
Share income (dividends and capital gains) is taxed at 27% up to 79,400 DKK (158,800 DKK for married couples) and 42% above that threshold. Including corporate tax of 22%, the total effective rate can reach approximately 54.8%.
What is the labour market tax (AM-bidrag) in Denmark?+
AM-bidrag is an 8% mandatory contribution deducted from gross income to fund employment-related benefits like unemployment insurance, maternity leave, and sickness benefits. From 2026, employees under 18 are exempt from this contribution.
How do I file my tax return in Denmark?+
Tax returns are filed online through TastSelv (skat.dk) by May 1st (July 1st with extension). Most information is pre-filled by employers. Taxes are withheld at source (A-skat) throughout the year, and final settlement occurs after filing.
What deductions can I claim in Denmark?+
Common deductions include: employment deduction (max 63,300 DKK), commuting expenses (2.28 DKK per km for 25-120 km), union fees (max 7,000 DKK), pension contributions, interest on loans, and domestic services (max 18,300 DKK).
Sources and Further Reading
Calculate Your Tax in Denmark
Use our free calculator to estimate your take-home pay with the new 2026 tax brackets, deductions, and AM-bidrag. See exactly how the reform affects your salary.
Disclaimer
This article provides general information about personal taxation in Denmark and should not be considered professional tax advice. Tax laws are complex and individual circumstances vary significantly. Municipal tax rates, available deductions, and tax obligations depend on your specific situation. For personalized guidance, please consult with a qualified tax advisor or contact the Danish Tax Agency (Skattestyrelsen). Information is current as of January 2026 based on the approved tax reform.