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Sweden budget tax cuts: What we know about how much you'll get

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Sweden budget tax cuts: What we know about how much you'll get
Here's what we know about the budget so far. Photo: Martina Holmberg/TT
11:39 CEST+02:00
The government will put forward its new budget proposal on September 18th, but as usual many of the changes have been announced in advance. Here are some of the tax breaks.

The most significant reform is the decision to abolish the austerity tax, introduced in 1995 as a temporary move to consolidate the budget after Sweden's 1990s financial crisis. It was originally intended to be scrapped three years after its introduction, but it stuck around and formed part of the state income tax.

The death of the austerity tax is expected to cost the state around six billion kronor a year (roughly $620 million), and follows the so-called January Agreement which allowed the Social Democrat-Green coalition to form a government with the somewhat reluctant support of the opposition Centre Party and Liberals.

If you are already a high earner, this will bring a lot more money to your coffers. Today, the austerity tax is paid by people on a salary of more than 703,000 kronor a year. According to the finance ministry this means that Sweden's 345,000 highest earners will get a tax cut of on average 17,700 kronor a year.

LONG READ: Does Sweden's tax system really screw the rich?

But high earners are not the only people in line for a tax cut.

Old-age pensioners on a pension of more than 17,000 kronor a month are also set to get a lower tax bill in 2020. This is expected to cost the state 4.3 billion kronor.

PENSION HACKS: How to make the most of your time in Sweden

Pensioners who live on a low income and are entitled to a 'guarantee pension' – a minimum regardless of a person's salary status when they were working – will see their minimum raised by 200 kronor a month.

As The Local has previously reported, residents working in around 80 municipalities in rural and remote parts of Sweden are also set to get a tax cut of around 100 kronor a month in the new budget proposal.

READ ALSO: Are you one of 850,000 rural residents in line for tax break?

A complicated fuel tax change will see the price per litre of petrol effectively increase by around 0.15 kronor at the pump, an adjustment for inflation mitigated by a decision to lower the petrol tax at the same time.

But according to economists there are no clear 'losers' of the budget this year, no major tax hikes expected for any particular groups and no surprises expected when the final budget is presented on Wednesday.

"Households, especially employed workers, have been getting significantly better off over a fairly long period of time with good income growth, raised benefits and lower taxes. Child and multi-child allowances were recently adjusted. There is not much room for reform. From the perspective of private finances I don't think you can expect much more," Arturo Arques, economist at Swedbank, told Swedish newswire TT.

Vocabulary

austerity tax – (en) värnskatt

guarantee pension – (en) garantipension

budget – (en) budget

tax cut – (en) skattesänkning

child allowance – (ett) barnbidrag

We're aiming to help our readers improve their Swedish by translating vocabulary from some of our news stories. Did you find it useful? Do you have any suggestions? Let us know.

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