A new year brings new laws and regulations. And 2026 is no exception. Sweden’s budget bill and several regulatory changes introduce a number of updates that will directly affect those working with HR and payroll. To help you prepare, we asked our product specialist Rickard Åsell to highlight the most important changes to keep an eye on ahead of 2026.
Please note: This article focuses on Swedish legislation and regulations and how they affect employers and HR and payroll professionals operating in Sweden.
The Retirement Age Is Raised to 67
The Swedish pension system is currently undergoing one of its most significant reforms in modern times. With the introduction of the so-called “target retirement age” (riktålder), the retirement age is now directly linked to life expectancy.
The aim is to adapt the pension system to longer life spans while ensuring that pensions remain financially sustainable and provide a reasonable level of income in the future.
In 2026, the new target retirement age will be applied for the first time. For employers, this means new rules and age limits to be aware of.
In short:
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The target retirement age determines from what age individuals can start drawing the public pension.
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The Swedish Parliament decides on the retirement age one year at a time.
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Each decision is made six years in advance to allow for long-term planning.
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From 2026, the retirement age is raised to 67.
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This decision applies until 2031.
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According to current forecasts, the target retirement age is expected to remain at the same level for at least two additional years after that.
Tax Implications: Avoiding a Repeat of the “1957 Issue”
Many employers remember the situation in 2023, when the retirement age was raised to 66. Individuals born in 1957 ended up in an unfavourable tax position and paid more tax than expected, which later required retroactive compensation.
Ahead of 2026, lawmakers have taken steps to avoid a similar situation:
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No Change to Tax Brackets in 2026. The age limits used for income tax purposes remain at 66 for this year.
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Postponed Increase of the Enhanced Basic Allowance. The age threshold for the higher basic allowance is moved to 2027.
In practical terms, this means that individuals born in 1959 will fall under tax column 3 for the 2026 income year. They will benefit from lower tax thanks to the enhanced basic allowance, without the risk of the unexpected “penalty tax” that affected those born in 1957.
What About Occupational Pensions and Insurance Schemes?
Occupational pension agreements have not yet been fully aligned with the new target retirement age. In many cases, pension accrual still ends before the age of 67.
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ITP currently has an upper age limit of 66.
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ASL via Fora has an age limit of 65.
Some agreements, however, allow employers to choose to continue paying pension contributions for older employees. It may therefore be wise to consider how you want to handle pension contributions as an employer.
At the same time, several group insurance schemes, such as AGS, TFA, TRR and ITP disability pension, have already adjusted their age limits to 67. More information is available via Avtalat.se or through your employer organisation.
Tax and Employer Contribution Updates
Temporarily Reduced Employer Contributions for Employees Aged 19–23
If you employ younger staff, or are considering doing so, this is worth noting:
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Employer contributions will be temporarily reduced for employees aged 19–23 between 1 April 2026 and 30 September 2027.
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During this period, employers will only pay the old-age pension contribution and half of the remaining contributions, resulting in a total rate of 20.81 percent.
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The reduced rate applies to remuneration of up to SEK 25,000 per calendar month.
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Any salary exceeding SEK 25,000 per month is subject to the full employer contribution rate of 31.42 percent.
Full Employer Contributions Up to the Year an Employee Turns 67
As a result of the higher retirement age, the threshold for paying only the old-age pension contribution is also raised. From the year an employee turns 68, only the old-age pension contribution is payable. This means that full employer contributions apply up to and including the year the employee turns 67.
Växa Support Removed From the PAYE Return
Växa support is a government incentive designed to make it easier and more affordable for small businesses to hire their first, and in some cases second, employee. In practice, it involves reduced employer contributions for a limited period.
From January 2026, Växa support will no longer be handled through the employer’s PAYE return on an individual level (AGI). The relevant fields in the PAYE return will be removed.
Instead, employers will pay standard employer contributions via the PAYE return. Reimbursement for Växa support will then be applied for separately through the Swedish Tax Agency.
Read more about the management of Växa-stöd here.
Changes to Regional Support Deductions
Regional support provides reduced employer contributions for businesses operating in certain geographical areas where conditions may be more challenging.
A new field has been added to the PAYE return for employers claiming regional support. Employers must now state the “total amount of other operating aid, excluding regional support, received so far this year” (field FK463).
This includes, for example, support for grocery stores in rural areas, newspapers, or regional airports and ports. Only a limited number of employers eligible for regional support are expected to be affected by this change.
Rad more about the changes here.
New Rules for Company Cars and Charging
Permanent Tax Exemption for Workplace Charging
From 1 July 2026, free charging at the workplace becomes a permanent tax exemption. The legislation now states “until further notice”, providing greater long-term certainty.
This applies not only to company cars, but also to employees’ private cars and even electric bicycles charged at the workplace.
It is important to note that the exemption only applies to charging at the workplace. Charging at home or at public charging stations that the employer pays for remains a taxable benefit.
Extended Deduction Rights for Plug-in Hybrids
From 1 July 2026, the right to deduct fuel costs for business travel is clarified for plug-in hybrid vehicles. Employers will be able to deduct fossil fuel costs for business travel even if the car has been charged free of charge at the workplace.
Previously, the rules discouraged workplace charging, since doing so could jeopardise the fuel deduction. The updated rules are designed to encourage charging and support environmental goals.
For employers, this means simpler administration. There is no longer a need to document exactly which energy source powered the car for each kilometre driven. The result is fairer treatment for employees and significantly less administrative complexity.
No More Secret Salaries: The Pay Transparency Directive Becomes Swedish Law
The era of salary secrecy is coming to an end. At the same time, requirements to address unjustified pay gaps between women and men will become significantly stricter.
The EU Pay Transparency Directive represents one of the most substantial changes to HR and payroll practices in Sweden in many years. The legislation is expected to enter into force in June 2026. During the spring, the Swedish Parliament is expected to decide how the directive will be implemented in national law.
The Equality Ombudsman (DO) is currently working on the technical framework for the new mandatory pay gap reporting.
While some details are still being finalised, now is the time to start preparing how you work with pay setting and transparency in order to meet the new requirements.
Want a clear picture of what lies ahead and how to prepare with the right processes and tools? In our on-demand webinar, we walk through the requirements of the Pay Transparency Directive and share practical tips on how you and your team can take the first steps already today.
Watch the webinar here (in Swedish).
Making Compliance Easier With Flex HRM
When laws and regulations change, both tools and processes need to keep up. At Flex, we closely monitor regulatory developments and continuously update our system, so you can feel confident that everything is handled correctly from day one.
And perhaps best of all: HR and payroll are brought together in one seamless system. Less hassle, more control. Curious about how Flex HRM can simplify your day-to-day work? Get in touch with us today.
