Swedish Government Unveils Major Tax Cuts in Budget for Autumn 2025
The Swedish government proposes significant tax cuts to bolster the economy amid a downturn.
Key Points
- • A record 80 billion kronor allocated for reforms
- • Permanent income tax cuts proposed
- • Temporary food VAT reduction from 12% to 6%
- • Increased national debt anticipated, but manageable
In a significant shift in fiscal policy, the Swedish government, in collaboration with the Sweden Democrats (SD), has proposed a comprehensive tax cut initiative in the upcoming autumn budget, aimed at revitalizing an economy hindered by recessionary trends. Allocating a record reform budget of 80 billion kronor, ministers believe these measures are essential to stimulate household consumption and restore public confidence.
The proposed package includes a temporary reduction of food VAT from 12% to 6% alongside a more substantial tax initiative estimated to cost 30 billion kronor. Finance Minister Elisabeth Svantesson highlighted the urgency, stating, "This is a very large injection into the Swedish economy. This is a good foundation for households to start becoming more optimistic."
Among the notable elements of the tax plan is the introduction of a job tax deduction that will lessen the tax burden by approximately 400 kronor for individuals earning 38,800 kronor monthly and more than 700 kronor for those making over 60,000 kronor. Noteworthily, these cuts in income tax are intended to be permanent, differing from the temporary VAT relief on food.
Furthermore, the tax cuts extend to pensions and individuals on sickness or activity benefits, directly addressing concerns voiced by SD’s economic spokesperson Oscar Sjöstedt, advocating for equitable tax treatment for those unable to work. Other measures within the tax package will include a reduction in electricity taxes and decreased preschool fees.
Despite increasing the national debt slightly through anticipated borrowing to finance these initiatives, Svantesson defended the approach, asserting that breaking the recession requires immediate and assertive action. She reassured that Sweden's current debt levels remain manageable and projected only a marginal rise by 2028. The government is committed to leveraging these tax cuts to rebound from economic challenges and enhance fiscal health among households.