Two important changes to Denmark’s income tax rules take effect in 2025. These are beskæftigelsesfradrag, the deduction given to everyone in employment; and new limits to topskat, the high tax rate applied to the top proportion of earnings over a certain amount.

In 2026, topskat rules change again, introducing to new top-end tax brackets known as mellemskat (“medium tax”) and toptopskat (“top-top tax”), which may provide a tax saving or a higher tax burden for the highest earners.

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In a newsletter, financial services company PwC outlines the implications for tax payers of the above changes, after the Tax Ministry published the thresholds which will be applied to the new rules as well as existing ones. The thresholds are based on priced indexes and updated regularly.

The thresholds confirm higher employment deductions and top-tax earning limits next year, meaning tax savings for both regular wage earners as well as single household providers, PwC says.

“What this will mean exactly for each individual depends naturally on an individual calculation, but many will experience a tax saving to a larger or smaller degree,” PwC tax expert Søren Bech says in the newsletter.

Because the employment deduction or beskæftigelsesfradrag will be increased in 2025, the amount employed people can earn tax-free goes up. The deduction is calculated at 10.65 percent of the wage, but the limit will be raised from 45,100 kroner in 2024 to 55,600 kroner in 2025.

Therefore, the higher limit will benefit people who earn over 423,000 kroner per year, who would have reached the maximum deduction in 2024 but can now continue to earn an additional deduction until their annual income reaches around 522,000 kroner (10.65 percent of this equates to the new limit of 56,000 kroner).

Single household providers get an additional deduction under the new rules, with the 6.25 percent of pay tax deductible in 2024 raised to 11.5 percent next year. 

To give an idea of how much can actually be saved in kroner, PwC writes that an example income of 522,000 yearly in 2025 will give a tax bill lower than 2024 by 2,600 kroner.

A single provider with the same income will save an additional 5,700 kroner on top of this – making them 8,300 kroner better off after tax.

The “top-tax” threshold, after which you pay an additional 15 percent in tax on any income above the threshold (note this does not apply to your entire income, just the portion above the threshold), moves from 640,000 kroner this year to 665,000 kroner in 2025. That is a monthly salary of around 55,400 before tax. 

As such, if your income is over 665,000 kroner per year, you will pay around 3,700 kroner less in ‘top-tax” in 2025. Added to the employment deduction, the total saving is 6,300 kroner across the year.

The situation will change again when new thresholds come into force in 2026, Bech noted in the PwC newsletter.

“The introduction of the medium tax will result in greater tax savings compared to 2025, as the top tax will only need to be paid when income exceeds 750,000 kroner (2024 level). On the other hand, the top-top tax threshold of 2.5 million kroner (2024 level) will lead to a higher overall tax burden,” he said.

“The tax-free gift parents can give to their children will be raised to 76,900 kroner in 2025, so mum and dad can give their child 153,800 tax-free in 2025,” he also noted.