EXPLAINED: How does Norway's bracket tax for income work?
Norway has a progressive tax on gross salary and other personal income, commonly known as the bracket tax. But what are the rates, and how much will you have to pay in the country known for its steep taxes?
While many are familair with the concept of income tax, bracket tax may be a confusing concept for many.
The bracket tax in Norway is calculated based on the individual's gross salary income and other corresponding incomes, such as sick pay, work assessment allowance, disability benefit, and pension. Essentially it is a tax on one's income after income tax.
The country's bracket tax consists of five steps, ranging from 1.7 percent bracket tax for the 1st step to 17.4 percent for the 5th step.
Note that, according to the rules in force for 2022, you do not pay any bracket tax on the first ca. 190,000 kroner of your personal income.
The bracket steps for 2022 are as follows:
No bracket tax
Income between NOK 0 – 190,349: No bracket tax
Step 1
Income between NOK 190,350 – 267,899: 1.7 percent bracket tax
Step 2
Income between NOK 267,900 – 643,799: 4.0 percent bracket tax
Step 3
Income between NOK 643,800 – 969,199: 13.4 percent bracket tax (residents of Finnmark and Nord-Troms pay 11.4 percent due to a special reduction in the surtax rate for the region)
Step 4
Income between NOK 969 200 – 1 999 999: 16.4 percent bracket tax
Step 5
Income over NOK 2,000,000: 17.4 percent bracket tax
Other taxes and contributions to keep in mind
Income tax: Remember that the bracket tax is calculated on your personal income and comes on top of the income tax, which is paid at the rate of 22 percent.
Personal income is defined as your salary or other similar money which replace a salary, such as sickness benefits, work assessment allowance, disability benefits, and pension.
As the Tax Administration points out, bracket tax is calculated on gross income, so any deductions you might be entitled to won't be deducted before bracket tax is calculated.
Wealth tax: The wealth tax in Norway is paid on the wealth one has as of December 31st each calendar year. Wealth is usually defined to include bank deposits, shares, cars, and property.
The wealth tax is paid to both the municipality you live in and the Norwegian state. It is calculated based on your net wealth – the wealth left over after deductible debt has been deducted.
You can find more information on the wealth tax brackets that apply here.
Note that if you're a tax resident in Norway, you'll be liable to pay tax to Norway on all your income that's earned in Norway or abroad.
Provisions in tax treaties with other countries can limit the amount of tax that must be paid to Norway but make sure to check the rules that apply to wealth abroad here.
National Insurance: Don't forget that you are also liable for National Insurance contributions, which finance the country's National Insurance scheme.
These are calculated on personal income, and the rates for 2022 can be found here.
You can find more information on Norway's National Insurance scheme in general on the Norwegian Labour and Welfare Administration's (NAV) site.
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While many are familair with the concept of income tax, bracket tax may be a confusing concept for many.
The bracket tax in Norway is calculated based on the individual's gross salary income and other corresponding incomes, such as sick pay, work assessment allowance, disability benefit, and pension. Essentially it is a tax on one's income after income tax.
The country's bracket tax consists of five steps, ranging from 1.7 percent bracket tax for the 1st step to 17.4 percent for the 5th step.
Note that, according to the rules in force for 2022, you do not pay any bracket tax on the first ca. 190,000 kroner of your personal income.
The bracket steps for 2022 are as follows:
No bracket tax
Income between NOK 0 – 190,349: No bracket tax
Step 1
Income between NOK 190,350 – 267,899: 1.7 percent bracket tax
Step 2
Income between NOK 267,900 – 643,799: 4.0 percent bracket tax
Step 3
Income between NOK 643,800 – 969,199: 13.4 percent bracket tax (residents of Finnmark and Nord-Troms pay 11.4 percent due to a special reduction in the surtax rate for the region)
Step 4
Income between NOK 969 200 – 1 999 999: 16.4 percent bracket tax
Step 5
Income over NOK 2,000,000: 17.4 percent bracket tax
Other taxes and contributions to keep in mind
Income tax: Remember that the bracket tax is calculated on your personal income and comes on top of the income tax, which is paid at the rate of 22 percent.
Personal income is defined as your salary or other similar money which replace a salary, such as sickness benefits, work assessment allowance, disability benefits, and pension.
As the Tax Administration points out, bracket tax is calculated on gross income, so any deductions you might be entitled to won't be deducted before bracket tax is calculated.
Wealth tax: The wealth tax in Norway is paid on the wealth one has as of December 31st each calendar year. Wealth is usually defined to include bank deposits, shares, cars, and property.
The wealth tax is paid to both the municipality you live in and the Norwegian state. It is calculated based on your net wealth – the wealth left over after deductible debt has been deducted.
You can find more information on the wealth tax brackets that apply here.
Note that if you're a tax resident in Norway, you'll be liable to pay tax to Norway on all your income that's earned in Norway or abroad.
Provisions in tax treaties with other countries can limit the amount of tax that must be paid to Norway but make sure to check the rules that apply to wealth abroad here.
National Insurance: Don't forget that you are also liable for National Insurance contributions, which finance the country's National Insurance scheme.
These are calculated on personal income, and the rates for 2022 can be found here.
You can find more information on Norway's National Insurance scheme in general on the Norwegian Labour and Welfare Administration's (NAV) site.
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