Budget News for Your Wallet: Lower Taxes on Savings, Pensions, and Work

1 augusti 2024

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The government has introduced a budget with investments totaling 60 billion SEK, with 27 billion allocated to tax cuts. But what does this mean for your finances? Here's a look at four key areas that could impact your wallet.

 

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  1. New Earned Income Tax Credit: The government has several plans to put more money in the pockets of those who work. Over 4 million employees are expected to benefit from the enhanced earned income tax credit, providing an average tax reduction of 2,600 SEK per year. Additionally, they aim to eliminate the phasing out of the tax credit, which would favor high-income earners
  2. Reduced Tax on Pensions:The government also aims to lower taxes for pensioners. If you have a median income of around 21,500 SEK per month, the tax reduction will amount to 1,400 SEK per year, according to the government.
  3. Extended Supplement in Housing Allowance:The temporary additional benefit, introduced a few years ago, is being extended once again and can be up to 1,325 SEK. The benefit will be extended for another 6 months into 2025.
  4. Reduced Tax on Popular Savings Accounts:.The government also plans to lower taxes on ISK, capital insurance, and PEPP products. Starting in 2025, the first 150,000 SEK in these savings forms will be tax-free, and in 2026, the tax-free threshold will increase to 300,000 SEK. This means that the tax will be 750 SEK lower from next year if you have a median savings of around 78,000 SEK in your ISK.

Here you can read the full budget proposal.

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Lower Taxes on Work

On average, the tax is lowered by about 2,600 SEK per year for those covered by the credit."

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Lower Taxes for Pensioners

Taxes are also lowered for pensioners. If you have a median income of around 21,500 SEK, you can look forward to a tax reduction of 1,400 SEK per year.

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Extended Supplement in Housing Allowance

The additional benefit is extended for the first 6 months of 2025. It will be up to 1,325 SEK.

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Tax-Free Savings in Popular Savings Accounts

  • The first 150,000 SEK a person saves in an ISK or capital insurance will be tax-free.
  • The tax-free threshold will increase to 300,000 SEK in 2026.

 

Explanations:

PEPP-product (Pan-European Personal Pension product): A PEPP-product is a savings product developed within the EU to facilitate and encourage long-term private savings for retirement. It aims to offer a standardized pension product that can be used across EU member states, making it easier for individuals to save for their retirement regardless of where they live or work within the EU.

Median and Average:

  • Average Savings: This is the arithmetic mean of all savings amounts. It is calculated by adding up all the savings amounts and then dividing by the total number of savings entries. The average can be influenced by extremely high or low values, which might skew the result.

  • Median Savings: This is the middle value when all savings amounts are arranged in ascending order. If there is an even number of entries, the median is the average of the two middle values. The median is less affected by extreme values and can provide a more accurate representation of what a "typical" person saves.

To the Savings Guide ( In Swedish)
Publicerad 2024-08-01