The Swedish government's Budget Bill for 2026

The following is a summary of some of the fiscal policies and proposals of the Budget Bill, most of which were presented before today in the time leading up to the Budget Bill's presentation. Schjødt's quarterly newsletter, set to be published at the end of September, will elaborate on some of the proposals, alongside other tax-related news of this year's third quarter.

All changes are proposed to enter into force on 1 January 2026, unless otherwise indicated.

1. Changed tax rules for owners of closely held companies
   The Budget Bill includes a proposed reform of the tax rules for owners of closely held companies, including intended improvements and simplifications to the existing framework. The proposal has been covered in our previous tax newsletter, on 5 July 2024, and we will elaborate on the final proposal in our next tax newsletter.
   
   
2. Reduced income tax for non-residents (SINK)
   The tax rate for non-Swedish individuals (SINK) is proposed to be lowered. The tax rate is proposed to be reduced from 25 % to 20 % in two steps, with the first reduction being from 25 % to 22.5 % on 1 January 2026, and the second reduction being from 22.5 % to 20 % on 1 January 2027.
   
   
3. Corporate donation tax relief
   A tax reduction for donations from legal entities to non-profit activities is proposed to be introduced. The proposal concerns monetary donations amounting to at least SEK 2,000, and the tax reduction amounts to the value of donations paid during the calendar year multiplied by the corporate tax rate. The basis for the tax reduction may not exceed SEK 800,000 for a calendar year.
   
   
4. Improvements to the tonnage tax system
   In the budget bill, the government announces its intention to submit a proposal in 2026 regarding improvements to the tonnage tax system, which will enable more companies and vessels to be included. Furthermore, the intended proposal will include certain adjustments and clarifications to ensure the regulation better aligns with EU state aid rules.
   
   
5. Amended rules on the allocation of input VAT deductions
   The turnover method is proposed to be introduced as the explicit main rule for allocation of input VAT deductions where acquisitions are made for both taxable and VAT-exempt transactions. The proposal is suggested to enter into force on 1 January 2027.
   
   
6. Temporary reduced VAT on food
   The VAT on food is proposed to be temporarily reduced from 12 % to 6 %. The lower rate is proposed to be applied from 1 April 2026 until 31 December 2027.
   
   
7. Increased deduction limit for commuting expenses
   The deduction limit for costs related to travel between home and workplace is proposed to be increased from SEK 11,000 to SEK 15,000. This also applies to travel to educational institutions and travel required to report to a new workplace.
   
   
8. Reduced tax on employment income and pensions
   The Budget Bill includes a proposal for an enhanced earned income tax credit (Sw. jobbskatteavdrag) and an increased deduction for individuals aged 66 and over.
   
   
9. Permanent tax exemption for charging at the workplace
   A temporary tax exemption for the benefit of electricity for charging certain vehicles was introduced on 1 July 2023. The exemption means that charging a car or certain other vehicles at a charging point or electrical outlet provided by the employer in connection with the workplace can be done without the employee being taxed as a benefit for the electricity consumption. The Budget Bill proposes that this tax exemption should remain in effect until further notice.
   
   
10. Abolished vehicle tax on trailers
    The Budget Bill proposes that the vehicle tax is removed for certain trailers, including caravans. For the sake of simplicity, it is proposed that the vehicle tax is abolished for all trailers with a taxable weight of up to 3 tons. The change is proposed to enter into force on 1 February 2026.
    
    
11. Temporary reduction of employer contributions for young employees
    Temporarily reduced employer contributions are proposed for employees between 19 and 23 years old. The proposal is proposed to enter into force on 1 April 2026 and will apply until 30 September 2027.
    
    
12. Reduced VAT rate on dance events
    The VAT rate on dance events is proposed to be reduced from 25 % to 6 %. The proposal is made in order to match the rate applied on other cultural events and is proposed to enter into force on 1 July 2026.
    
    
13. Reduced alcohol tax for beverages from independent small producers
    A reduced alcohol tax for beer produced by independent small breweries is proposed to take effect on 1 July 2026.
    
    
14. Increased tax on tobacco products
    The tobacco tax on cigarettes, cigars, cigarillos, smoking tobacco, chewing tobacco, and other tobacco products is proposed to increase by approximately 3-4% in addition to the annual indexation on 1 January 2027.