New tax reform – what you need to know in 2025
Last year, the Danish Parliament passed a reform of personal taxes. The first changes will take effect as early as 2025. Here is what you need to know.
New thresholds for top taxation – boost your pension:
If you are one of those who currently pay top-bracket tax and are expected to pay new middle-bracket tax in 2026, you can benefit from boosting your pension this year. By paying extra into your pension this year rather than next year, you can get around DKK 300–400 more per DKK 1,000 you spend on pension. The exact amount depends on how much you already pay into your pension and how long you have until state pension age – that determines the size of your tax deduction for pension contributions.
Improved tax deduction opportunities for top-bracket tax:
If you expect to pay top-bracket tax in both 2025 and in 2026, you can look forward to improved tax deduction opportunities. Your pension savings can grow by around DKK 2 million extra before you need to pay top-bracket tax on the disbursement. You can take advantage of this as early as this year.
Top-top-bracket tax:
For the few who expect to pay the so-called top-top-bracket tax from 2026, it is possible to save up more for pension before being taxed on the disbursement. However, we recommend waiting until 2026 to increase contributions, as the higher marginal tax rate provides greater tax deductions and more pension benefits.
| From 2026, the current top-bracket tax of 15 per cent will be divided into: |
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middle-bracket tax of 7.5 per cent (income of approx. DKK 665,000–807,000 before labour market contributions in 2025 levels).
The above thresholds are estimated based on the agreement text and the annual adjustment of 3.5 per cent in 2024 and 3.9 per cent in 2025. |
Increased employment tax deduction:
In 2025, both the general and the additional employment tax deductions for single providers will be increased. The change has limited impact on pension savings. However, it makes it more attractive for part-time employees to work longer hours.
From 1 January 2025, the method of calculating state pensions etc. will change
Going forward, your state pension may be reduced if you are married or cohabiting with someone who receives social benefits – e.g. unemployment benefits, public early retirement benefits, labour market exit benefits under the flexi-job scheme or sickness benefits. It is down to the fact that from 2025, only income subject to labour market contributions (‘AM-bidrag’) will be considered work income and therefore not included in the calculation of the spouse's pension.