Breaking News: Changes in Swedish Tax Laws for 2025
In a significant development for Swedish taxpayers, the threshold for state income tax has been raised, allowing individuals to earn more before being subject to state tax. For the income year 2025, the limit stands at 643,100 SEK per year, with a higher threshold of 733,200 SEK for individuals over the age of 66. Additionally, there are enhancements to the job tax deduction and basic deduction for seniors, resulting in lower taxes on labor income and benefiting those who choose to continue working past the age of 66.
Keeping More of Your Salary
Even wage earners under the age of 65 with incomes exceeding 16,000 SEK per month will receive an enhanced job tax deduction. This deduction reduces the overall tax on labor income, particularly benefiting those with regular employment income. The net salary, i.e., the money that ends up in your account after taxes, will be higher than it would have been otherwise. This change aims to boost the willingness of Swedes to work while strengthening household purchasing power.
Reduction in Mortgage Interest Deduction
A change impacting loans is the further reduction of the mortgage interest deduction for consumer loans and unsecured loans. Starting in 2025, only half of the interest costs will be deductible, with the deduction being completely phased out by 2026. This translates to increased costs for unsecured loans, underscoring the importance of managing debts effectively.
Savings Made Easier
Several changes affecting interest rates and taxes for student loans, investment savings accounts (ISAs), and other forms of savings are set to take effect in 2025. The interest rate on student loans from CSN will increase to 1.981%, up from 1.23% in 2024, making the cost of student loans slightly higher. On the other hand, the tax on savings in ISAs will be reduced to 0.89%, with savings up to 150,000 SEK being tax-free from January 1. This move aims to make ISAs even more advantageous for small savers, potentially encouraging more people to start saving.
Capital Taxation and Green Investments
For traditional savings accounts and other taxable investments, the regular capital income tax of 30% on profits remains unchanged. However, these forms of savings may be less favorable compared to ISAs and KFs. Nonetheless, the ability to offset gains and losses is a key advantage to consider when choosing between different investment options.
In a bid to promote green technology investments, new rules for tax deductions on installing solar panels, charging stations, and other sustainable solutions are being introduced. These changes aim to simplify and incentivize investments in green initiatives.
Easing the Burden for Mortgage Borrowers
For mortgage borrowers, 2025 is expected to bring some relief, with plans to raise the mortgage cap from 85% to 90% of the property’s value. If implemented, this could make it easier for first-time buyers to finance their home purchases, although the details are yet to be finalized.
Updates for Entrepreneurs
For entrepreneurs, the turnover threshold for VAT obligations is being raised to 120,000 SEK per year, reducing administrative burdens for small businesses. Moreover, there are proposed changes to the 3:12 rules for closely held companies from 2026, potentially allowing dividends of up to 300,000 SEK to be taxed at a rate of 20%, up from the current 200,000 SEK limit. Planning ahead for these potential changes is advisable for business owners.
Benefits for Sole Proprietors
Sole proprietors running small businesses can also expect some relief in 2025. The threshold for how much of the company’s profits can be taxed as capital income instead of regular income is being raised, resulting in lower taxes on that portion of the profit. This adjustment could make it more profitable to operate a business, but strategic tax planning is essential to maximize the benefits.
Stay tuned for more updates on the evolving tax landscape in Sweden as these reforms come into effect in 2025.