Summer job 2: Danuta tells them her salary needs to be taxed in tax bracket two.Summer job 1: Danuta tells them they can use her personal tax credit.Danuta has been working part time in the winter beside her studies and has used part of her personal tax credit for the first five months. All her payments from pension fund C need to be calculated in tax bracket 2.ĭanuta will be working two summer jobs this summer and estimates her total salary will be approximately 500,000 ISK per month, 400,000 ISK in one place and 100,000 ISK at the other, where she only works evenings. 120,482 ISK from pension fund B can be calculated in tax bracket one, but the rest needs to be in tax bracket two.The first tax bracket is from 0 – 370,482 ISK and Guðrún therefore needs to inform pension fund B and C to calculate her withholding tax in tax bracket two fully or partially.She tells pension fund A to use all of her personal tax credit. Firstly 250,000 ISK from pension fund A, secondly 150,000 ISK from pension fund B and thirdly from pension fund C 50,000 ISK. Guðrún receives her pension payments from three different pension funds, in total 450,000 ISK per month. Let's look at examples Example 1: Pension If the monthly salary is more than 1,040,106 ISK per month the part that exceeds that threshold must be calculated in tax bracket three at 46.25%. If the monthly salary with one employers goes above 370,482 ISK the withholding tax at the next employer should be calculated in the next tax bracket above. The withholding tax is as follows: Tax bracketĮach and every person, who receives payments from more than one employer at the same time, is responsible for informing their employers to insure that the correct tax percentage is withdrawn from their salary and the personal tax credit is used in a correct manner. That means that those who receive payments from more than one employer may need to make arrangements to insure that the correct tax percentage is withdrawn from their salary and therefore avoid tax debt in next years tax assessment. The withholding tax of individuals salaries has three tax brackets.
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