Sweeping Economic Reforms in Sweden Set to Boost Personal Finances in 2026

Sweden is poised to implement a range of significant economic reforms starting January and April 2026 that will directly affect the finances of millions of Swedes. These changes include tax reductions, adjustments to mortgage regulations, enhanced social benefits, and new policies impacting housing allowances and various service sectors.

Effective April 1, the value-added tax (VAT) on food will be halved from 12% to 6%, a measure set to last until December 31, 2027. Concurrently, the stringent amortization requirements for mortgages will be lifted, with the mortgage cap raised to 90% from the current 85%, pending government approval. These changes aim to ease financial pressures on households, especially those with substantial housing costs, as the cost limit for housing allowances will also increase.

January 1 will see enhancements to the Jobbskatteavdraget, Sweden's job tax deduction, resulting in an estimated monthly tax cut of approximately 400 SEK for individuals earning average salaries. Pensioners aged 67 and older will benefit from a new dental care compensation regime covering 90% of costs for common procedures such as fillings and root canals. Additionally, pensioners over 66 years will enjoy an increased basic tax deduction, lowering their taxes by around 150 SEK monthly. The tax-free savings limit on investment savings accounts (ISK) and capital insurance will double from 150,000 SEK to 300,000 SEK per person, incentivizing savings.

However, certain tax deductions will be eliminated, notably the deduction for unsecured loans (blancolån), which currently affects about 5.8 million Swedes. The VAT on dance event tickets will drop from 25% to 6% starting July 1, potentially boosting cultural participation.

Other notable legislative changes include tightening of criminal justice provisions, where conditional release will only be possible after serving three-quarters of sentences lasting six years or more. Refugees granted residency on humanitarian grounds will see their return migration grant increase dramatically from 10,000 SEK to 350,000 SEK per adult. Furthermore, uranium mining will be permitted again, albeit with municipal veto rights retained.

Economists predict these reforms will contribute to a stronger Swedish economy in 2026, with increases in employment, wage growth, and an improving housing market supported by low interest rates. Nevertheless, risks such as potential inflation shocks and stock market volatility remain. Susanne Spector, chief economist at Danske Bank, advises individuals who have faced economic challenges recently to bolster their financial resilience using any additional income, preparing for possible future crises.

Overall, 2026 brings a blend of tax relief, social benefit enhancements, and regulatory shifts expected to enhance economic conditions for many Swedish households while also posing adjustment challenges due to certain abolished deductions and new regulations.