Global Daily Tax News, Sweden Sets Out 2026 Tax Law Changes, (Jan 5, 2026)

The Swedish tax agency has released an overview of new laws and regulations that came into effect on January 1, 2026.

The deduction for spending by homeowners on labor for renovation or home rebuilding work has been returned to 30 percent, down from the enhanced level of 50 percent. The deduction, which should be claimed by the company providing the services, is not available for spending on materials, equipment, or travel expenses.

Also from January 1, 2026, the threshold above which expenses are deductible on business travel, including commuting, or for education, has been raised from SEK11,000 to SEK15,000.

The ordinary in-work tax credit is enhanced by increasing the tax reduction for people with earned income exceeding approximately SEK192,000 per year. Meanwhile, the tax reduction for people receiving welfare for illness or disability is strengthened by increasing the tax reduction for all taxpayers with a base income exceeding approximately SEK54,000 per year.

The special income tax rate for non-residents was cut from 25 percent to 22.5 percent of taxable income (excluding maritime sector income) from January 1, 2026, and will be further reduced to 20 percent from 2027.

A new deduction is introduced for gifts from legal entities to approved non-profit organizations.

Meanwhile, Sweden has implemented simplifications and improvements to the 3:12 regulations. These rules set out how much profit a stakeholder can withdraw as a dividend and pay 20 percent tax, with the remainder taxed as income at progressive rates.

The Government set out plans for reform of the 3:12 regulations in May this year. It proposed making the tax system simpler, in particular by merging the two calculation methodologies: the main rule and the simplified rule. Under those proposals, the amount liable to tax at 20 percent would be calculated based on salaries paid by the company and its subsidiaries. The Government previously said it anticipates that the 20-percent tax rate will be applied more broadly, typically limited to a closely held company's distributions up to approximately SEK320,000 (USD33,636). The tax authority has released guidance on the changes.