Tax & Deductions
AM-bidrag (Labour Market Contribution)
AM-bidrag (arbejdsmarkedsbidrag) is 8% of your gross income and is deducted before all other taxes. Every employee and self-employed person pays it. It funds unemployment benefits, early retirement and other labour market programmes.
Example: If you earn 500,000 kr. gross, you pay 40,000 kr. in AM-bidrag. Your taxable income is then 460,000 kr., on which all other taxes are calculated.
2026 Tax Reform — 4 Tax Brackets
From 2026, Danish income tax changes significantly. The old top tax model is replaced by a system with four progressive rates. This means more income groups are affected — and optimising your taxable income can pay off.
Base Tax (Bundskat)
The base rate of 12.08% is calculated on your income after the personal allowance (54,100 kr.) and employment deduction. All employees pay base tax.
Middle Tax (Mellemskat)
7.5% on the portion of your taxable income exceeding 641,200 kr. The middle tax is new in 2026 and hits incomes that previously only paid base tax.
Top Tax (Topskat)
15% on the portion of your taxable income exceeding 777,900 kr. The top tax is known from the old system, but the threshold has been adjusted.
Top-Top Tax (Top-topskat)
20% on the portion of your taxable income exceeding 2,592,700 kr. The top-top tax is entirely new and targets the very highest incomes.
Municipal Tax (Kommuneskat)
Municipal tax varies by municipality — typically between 23% and 27%. It is calculated on your income after the personal allowance and employment deduction. You also pay a health contribution as part of municipal tax.
You can see your municipal tax rate on your preliminary income assessment or at skat.dk. Municipal tax is often the single largest tax you pay.
Common Deductions and Estimated Savings
Personal Allowance (54,100 kr.)
The personal allowance is the amount you can earn tax-free. It is deducted automatically and applies to everyone — you do not need to do anything.
Employment Deduction (max. 63,300 kr.)
The employment deduction is 12.75% of your employment income after AM-bidrag, capped at 63,300 kr. It is calculated automatically and reduces your taxable income.
Interest Deduction (Rentefradrag)
Interest on loans (mortgage, SU loan, car loan, etc.) can be deducted. The deduction value is approximately 25-33% depending on your total interest expense and municipality. An interest deduction of 50,000 kr. typically saves you 12,500-16,500 kr. in tax.
Commuting Deduction (Befordringsfradrag)
If you commute more than 24 km to work (each way), you can claim a commuting deduction. The rate is 2.28 kr./km for the first 120 km and 1.14 kr./km above that. The deduction is calculated for the shortest route, regardless of transport method.
Home Improvement Deduction (9,000 kr./person)
You can deduct up to 9,000 kr. per person for labour costs on green renovations and energy improvements in your home. Labour only — not materials.
Household Services Deduction (18,300 kr./person)
You can deduct up to 18,300 kr. per person for household services such as cleaning, window washing, gardening and childcare.
Union Membership (max. 7,000 kr.)
You can deduct up to 7,000 kr. in union membership fees and unemployment insurance contributions. The deduction reduces your taxable income.
Church Tax (0.4-1.3% savings)
If you are a member of the Danish national church, you pay church tax (0.4-1.3% depending on municipality). If you opt out, you save this amount. On an income of 500,000 kr., this can mean savings of 2,000-6,500 kr. annually.
Preliminary Income Assessment (Forskudsopgørelse)
The preliminary income assessment is SKAT's estimate of your income and deductions for the coming year. It determines how much tax is withheld from your salary each month.
You should review your preliminary income assessment every year — ideally in November-December. If your details are incorrect, you risk either back-tax (with interest) or giving the state an interest-free loan. Check especially for changes in income, interest expenses, commuting deduction and union membership deduction.
You can update your preliminary income assessment at skat.dk under 'Forskudsopgørelse'. Changes take effect from the following month.
Strategic Pension Contributions
With the new 2026 tax brackets, it can be particularly advantageous to contribute to pension if you are close to a threshold. Pension contributions to ratepension reduce your taxable income and can thus move you below the threshold for middle tax (641,200 kr.) or top tax (777,900 kr.).
Example: If your taxable income is 660,000 kr., you pay middle tax on 18,800 kr. By contributing an extra 20,000 kr. to ratepension, you avoid middle tax entirely — a saving of approximately 1,410 kr. on top of the normal deduction for the pension contribution.
Take-Home Pay Calculator
Calculate your approximate net pay based on the 2026 tax rules. Enter your gross salary and see how the tax breaks down.
Deduction Checklist
Check the deductions that apply to you and see your estimated annual savings. Savings depend on your marginal tax rate.
12.75% of employment income, max. 63,300 kr. — calculated automatically.
Enter your annual interest expenses (mortgage, car loan, SU loan, etc.).
Enter km to work (one way). Applies above 24 km.
Up to 9,000 kr./person for green renovations (labour only).
Up to 18,300 kr./person for household services.
Up to 7,000 kr. for union and unemployment insurance.
Save 0.4-1.3% of your income by opting out of the national church.