At the turn of the year 2023/2024, the tax on ISK and capital insurance increased to a record high of 1.086% due to the rise in the government loan rate to 2.62%. Now, the government is proposing a tax cut for these savings forms from 2025. If the proposal is approved, it could benefit you as a saver.
What Does the Government's Proposal Mean? The government proposes introducing a tax-free base level of up to 300,000 SEK for savings in ISK and capital insurance policies. In May, the proposal was sent to the Council on Legislation for legal review before being brought to the parliament.
What Happens Next? It remains to be seen if the proposal will be passed and approved by the parliament. The Council on Legislation has pointed out some issues, and the government is now working to address these. It also depends on economic factors such as the budget's reform space and financing needs.
How Will Your Savings Be Affected? If the tax change becomes a reality and you have an ISK or are considering a capital insurance policy, it could be advantageous for you. Here are some key points:
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Tax-Free Base Level: Your savings up to 300,000 SEK in an ISK or capital insurance will be tax-free. You won’t pay any tax on the first 300,000 SEK of your savings.
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Adjusted Interest Rate for Cash in ISK: There has been debate over savers sometimes paying high taxes when the interest on cash in ISK accounts was higher than the government loan rate. Currently, interest is taxed at 30% if it exceeds the imputed income level, which was previously based on the government loan rate. Now, it is proposed that the threshold for this taxation be raised to the interest rate factor currently used to calculate the imputed income, namely the government loan rate plus one percentage point. Read more.
The proposal means that your tax costs as a saver will decrease with high deposit rates, as the threshold for taxation will be higher. In practice, however, the effect is limited, as most ISK accounts currently have a cash interest rate below the government loan rate.
When Will It Take Effect? If the proposal is passed, the new rules will take effect on January 1, 2025.
What Can You Do Now? For those who want to stay informed, it might be wise to follow the development and see how the proposal is handled in parliament and by the Council on Legislation. If it goes through, it could provide an advantage for you as a saver. You can read more about the proposal on the government's website.
Get Started with Long-Term Savings ISK and capital insurance are savings forms that benefit from the proposal. Learn more about Investment Savings Accounts (ISK) and capital insurance to understand how these savings forms work and what suits you best.