Swedish Government Proposes Major Tax Cuts in 2026 Budget
The Swedish government reveals a budget proposal for 2026 featuring extensive tax cuts to stimulate the economy.
- • 50 billion SEK allocated for tax cuts in the 2026 budget.
- • Immediate tax relief includes reduced income tax for employees and pensioners.
- • Temporary halving of food VAT from 12% to 6% from April 2026 to December 2027.
- • Total reform space in the budget amounts to 79 billion SEK.
Key details
On September 22, 2025, the Swedish government unveiled its budget proposal for 2026, placing a significant focus on tax reductions aimed at stimulating the economy and combatting a looming recession. Approximately 50 billion SEK will be earmarked for tax cuts, which constitute about two-thirds of the budget's total reform space of 79 billion SEK. The tax plan includes reduced income taxes for employees and pensioners, alongside a temporary halving of the food tax from 12% to 6% starting in April 2026 and continuing until December 2027.
Finance Minister Elisabeth Svantesson emphasized that these tax measures are designed to invigorate private consumption, providing an estimated 1,800 SEK monthly boost for families with two children. "Sänkta skatter ska få fart på Sverige," she noted, indicating that the budget is tailored for hard-working Swedes amid persistent global uncertainties and the challenges posed by recent events like the pandemic and the Ukraine war.
In addition to tax cuts, the budget allocates 4.5 billion SEK for educational investments and 5 billion SEK for healthcare improvements. Specific allowances include higher support for families, with a proposed housing allowance cap increase that could yield an additional 1,000 SEK monthly for large families. The reforms also encompass a job tax deduction expected to enhance disposable income by 333 SEK for those earning 35,000 SEK monthly and reductions in electricity tax which could save non-electric homes about 1,000 SEK annually and electric homes up to 2,000 SEK.
Svantesson explained that the government's intention is to stimulate growth by boosting domestic consumption and facilitating easier access to essential services. However, starting in 2027, the budget indicates tightening social benefits, introducing stricter eligibility requirements primarily targeting larger families.
The proposals will be submitted to Parliament, and decisions on these budgetary reforms are anticipated to be made in stages during November and December. With total expenditures expected to reach around 1,400 billion SEK, the proposed budget reflects the government’s strategic financial planning in a challenging economic landscape.