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How much could income tax payers in Denmark save on proposed cuts?

Michael Barrett
Michael Barrett - [email protected]
How much could income tax payers in Denmark save on proposed cuts?
How much could proposed income tax cuts save people who work in Denmark? Photo: Kristian Djurhuus/Ritzau Scanpix

The Danish government on Monday presented a range of proposed tax cuts across income groups, which it hopes to introduce by 2025.


The proposed cuts are aimed at all people who work in Denmark, with different measures targeting different income groups.

“90 percent of the tax cuts we are presenting today will go into bank accounts in the current electoral period [before the next general election, ed.],” Economy Minister Troels Lund Poulsen said at a briefing.

But Tax Minister Jeppe Bruus admitted a small number of the cuts will be phased and not completed until 2030.

That is due to required technical changes related to IT systems, Bruus said, while also stating that the majority of changes would be in place by the next election, which must take place no later than 2026.

The tax reform proposes cuts to personal income taxes amounting to some 10 billion kroner.

READ ALSO: Danish government announces major plan to cut income tax


Specifically, the reform will increase the income tax deduction given to people in employment, beskæftigelsesfradraget, from 10.65 percent to 12.75 percent. The current limit on the total deduction will be increased from 44,800 kroner to 56,200 kroner. 

Around 3.3 million working people in the country will see their taxes reduced as a result of the reform according to the government. That number includes people who are employed or who are self-employed and in profit from their business.

READ ALSO: Beskæftigelsesfradraget: What is Denmark's employment allowance?

An additional tax cut will be given to single-parent families. The existing additional employment deduction of 6.25 percent for single providers will be raised to 11.5 percent. And the limit in the total deduction increased from 24,400 kroner to 44,900 kroner.

This cut will benefit around 117,000 working single parents according to the government.

A new tax bracket, mellemskat or “medium tax” is proposed for incomes between 618,400 kroner and 750,000 kroner. This considerably reduces tax on the applicable portion of their income from 15 percent, the existing “top tax” rate, to 7.5 percent. Around 28,000 Danish taxpayers fall into this income bracket, broadcaster DR reports.


The government also proposes adding a new bracket of tax for the very highest earners, often referred to in Danish as toptopskat, literally “top-top-tax”. The new bracket will apply to people with annual incomes over 2.5 million kroner, who will pay 20 percent on income within this very highest bracket.

Groups which do not get a tax reduction under the proposed reforms include students, pensioners and people on unemployment benefits.

According to calculations conducted by broadcaster DR on Monday, the proposed cuts could mean savings in example income and professional groups as follows:

  • Builder married to a teacher with two children, combined income 960,000 kroner: annual saving 5,700 kroner
  • Single person, no children, total income 470,000 kroner: annual saving 2,900 kroner
  • Engineer married to a social worker with two children, combined income 1,150,000 kroner: annual saving 10,600 kroner
  • Company director married to a lawyer with two children, combined income 3,595,000 kroner: annual saving 8,200 kroner
  • Tradesperson, single parent with one child, total income 470,000 kroner: annual saving 8,000 kroner

After some of the proposed reform was leaked last week, libertarian think tank CEPOS calculated how people from various income brackets stood to gain or lose from the changes.

The centre estimated that only those eligible for the new so-called 'millionaire's tax' or top-top-skat, are likely to end up paying more tax.


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