Basic deduction and earned-income credit

Why net pay is not just gross minus a rate

The single most common misunderstanding about Swedish salaries is that net pay is gross pay times one minus the tax rate. It is not. Two income-dependent curvessit inside the calculation — the basic deduction (grundavdrag) and the earned-income tax credit (jobbskatteavdrag) — and because both change as your income changes, the effective rate you actually pay is different at every salary level. This is the real machinery behind “lön efter skatt”, and it is why take-home pay rises more slowly than gross pay. The amounts involved here come from Skatteverket; they have not been through the site’s own review and sign-off — check the cited source or the responsible authority.

The basic deduction lowers taxable income

The basic deduction is an amount subtracted from your income before any tax is worked out, so tax is charged on a lower taxable income rather than on the full gross. What makes it a curve rather than a flat sum is that its size depends on how much you earn. Scaled from the price base amount (59 200 kr for 2026), it starts modest at low incomes, rises to a maximum across a middle-income band, and then tapers back down toward a lower floor for high earners. It is rounded up to the nearest hundred kronor and can never exceed your income. The practical effect: a raise does not lift your taxable income by the full amount of the raise, because the deduction shifts at the same time.

The earned-income credit gives some back

The earned-income tax credit works in the opposite direction — it rewards work by reducing tax you would otherwise owe. It is offset only against municipal tax, never against state tax, and never below zero. Like the basic deduction it builds up with earned income and then levels off onto a plateau at higher incomes. For 2026 the credit was reinforced, so at most income levels it returns a little more than before. Because it lands specifically on municipal tax, its value in kronor also depends on your municipal rate — the same credit is worth slightly more where the municipal tax is higher.

What the two curves do together

Stack the two and you get the shape people notice on their payslips. At low and middle incomes the basic deduction and the credit together hold effective tax down. As income rises both taper — the deduction shrinks, the credit flattens — and once taxable income passes the state threshold a further 20 % state tax is added on top. That combination is why the marginal rate bends upward through the middle of the scale, and why two people at different salaries can face quite different take-home percentages. The curve coefficients come from the official Skatteverket and Ministry of Finance descriptions; the raw statute text is confirmed at final review.

What the calculator shows

The calculator shows the basic deduction and the earned-income credit as their own subtracted lines that push net pay back up, with a short note on why net pay does not rise as fast as gross pay. For a salary-only situation this version uses your annual income as the base for both curves — a named simplification that keeps the estimate honest about what it does and does not model.

The full content for this page is still in preparation and subject to review.