Denmark’s government presented the 2026 budget agreement on Thursday after making a deal with the opposition Conservative party.
Elements of the budget agreed with the Conservatives include an extension of the tax deduction for employment for working seniors and a postponement of higher car taxes.
A large number of key policies that were announced in the earlier draft budget remain in place in the final version, which has a clear majority to be adopted in parliament given Conservative support.
READ ALSO: What does Denmark’s 2026 budget proposal mean for foreign residents?
The government and the Conservative Party have agreed to raise the tax deduction for employment (beskæftigelsesfradraget) for working seniors, with the aim of encouraging older people to stay in the workforce longer.
The tax credit applies two years before the state pension age under current rules. This will be moved forward to five years by the agreement.
Additionally, the deduction rate and maximum deduction have been increased. The decision will cost the state four billion kroner over the four years from 2026-2029.
The parties have also agreed to postpone the planned introduction of taxes on electric cars, which were due to take effect in 2026. The delay of one year will cost the state 1.3 billion kroner.
Additionally, the Conservatives and the government have agreed on additional spending on climate and coastal protection, to the tune of around a billion kroner from 2026-2029. That is an increase compared to the 887 million kroner originally proposed in the draft budget.
School absenteeism is meanwhile set to be tackled with 30 million kroner per year set aside over a four-year period for initiatives aimed at the problem, with the option to set up a new research centre.
Proposals made in the August draft budget, which remain in place in the final version, include 1.1 billion kroner which has been set aside to increase staffing at kindergartens and nurseries by some 1,360 people across the country.
The final budget includes a number of measures the government says are aimed at easing living costs.
These include reduced fees at kindergartens and nurseries by reducing the maximum cap on parental contributions for a nursery or kindergarten place from 25 percent to 21.3 percent. The remainder of the cos is covered by municipalities.
Fees charged to a number of food producers, amounting to 50 million kroner a year, will be removed, giving a saving the government says will be passed on to consumers.
“A typical working family with a house will get 8,500 kroner [more] in 2026. That is noticeable,” Finance Minister Nicolai Wammen said when presenting the original budget proposal, citing Finance Ministry calculations based on living costs for a family with two children.
The budget includes slashes to taxes on electricity, chocolate and coffee, allowing foreign residents, visitors and Danes alike to save on everyday items.
Sales tax on books will also be eliminated in a measure designed to encourage more people to read, with the government previously saying it needs to address a "reading crisis."
Some 10 billion kroner of increased state spending has also been earmarked for the military as Denmark continues its ongoing military buildup.
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