Sweden Enacts Major Tax Cuts and Forecasts Strong Stock Market Growth for 2026

Sweden is set to undergo significant economic changes in 2026 with major tax reductions and optimistic stock market projections. A key development includes a substantial job tax deduction amounting to 17.36 billion SEK aimed at lowering taxes on income, pensions, and sickness benefits. This initiative will see average wage earners benefiting from a 400 SEK monthly tax reduction, while pensioners aged over 66 will receive around 150 SEK monthly off their taxes, aligning their benefits with younger workers earning similar incomes.

In addition to income tax cuts, the electricity tax will be reduced by nearly 10 öre per kWh, a 20% decrease starting January 1, 2026. This move fulfills an election promise by the Christian Democrats to ease household expenses. However, the government's proposed high-cost protection scheme for electricity bills has faced criticism for potentially being ineffective, as average spot prices have stayed below 1.5 SEK per kWh since 2022.

Another notable policy change is the significant increase in the return migration grant from 10,000 SEK to 350,000 SEK per person. This sizable raise aims to encourage immigrants who have not integrated into Swedish society to return to their countries of origin. The government has acknowledged concerns about possible fraud associated with this grant and pledged measures to prevent misuse.

Experts also project a favorable economic environment reflected in the stock market outlook. Global markets, including Sweden’s, are expected to continue rising in 2026 supported by stronger economies, increasing corporate profits, and government policies. Maria Landeborn, a senior strategist at Danske Bank, emphasized an overall positive sentiment among investors despite inherent risks.

Together, these fiscal adjustments and market expectations depict Sweden’s proactive approach to stimulating growth and easing financial pressures on its citizens as it progresses through 2026. Additional changes set for this year include new dental care support for the elderly and adjustments in mortgage regulations, reinforcing the government’s focus on broad economic welfare.