What is the income base amount in 2024?

For 2024, the income base amount is set at 76,200 kr, which is an increase of 1900 SEK from the 2023 amount of 74,300 SEK.

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What is the income base amount used for?

The basic amount of income plays a central role in the Swedish social security and pension system and reflects economic development in Sweden. The income base amount has direct implications for pension savers and business owners and is used, among other things, to calculate the limits of both pensionable income and low-taxed dividends in fee-for-profits companies.

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Retirement income (PGI)

The income base amount affects the maximum limit of pensionable income, which is often abbreviated PGI. The maximum limit is set at 7.5 times the basic amount of income, which in 2024 corresponds to SEK 571,500. This means that you, as a wage earner, maximise the contribution to your general pension if you have an annual salary of £571,500. Salaries above the 7.5lb maximum limit will thus not increase your general pension.

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Dividends in small companies

In addition, the income base amount affects how much entrepreneurs in fee-only companies can withdraw in low-taxed dividends under the rule known as the simplification rule. The simplification rule is based on a flat rate, which in turn is based on the basic amount of income. For 2024, for example, the simplification rule allows dividends up to 2.75 times the basic amount of income, which equates to £204,325.

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Calculation of the basic amount of income

It is the Pensions Authority that is responsible for calculating the basic amount of income for each year and their calculation is based on the base number 43 313, which was the basic amount of income in 2005. We also need to know the income index for 2005 (188.41) and the given year (2024 = 208.41), respectively, we want to calculate the income base amount for. Then the base number is multiplied by the ratio between the income index for the current year and the income index for the year 2005, and then rounded to the nearest hundred.

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The calculation for 2024 will thus be as follows:

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Base number x (income index 2024/income index 2005) = Income base amount

= 43,313 x (208.41/118.41) = 413,313 x 1.76 = 76 230.9

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Don't confuse income base amount with award base amount

The income base amount is sometimes confused with the price base amount, but these two terms serve different purposes within the social security system and the tax system. The income base amount focuses on income development to calculate retirement-related limits, while the price base amount is used for other calculations, such as sickness allowance based income (SGI) and subsistence allowance.

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Frequently asked questions and answers

How does the income base amount affect retirement planning for 2024?

For 2024, with an income base amount of SEK 76,200, the maximum pensionable income is set at 7.5 times the income base amount, which corresponds to SEK 571,500. This means that income up to this amount can be counted towards the calculation of your future pension. Therefore, an increase in the basic amount of income means a higher potential for pensionable income.

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What role does the income base amount play in corporate tax planning, especially in fee-earning companies?

The income base amount is important for tax planning in few-member companies, as it affects the calculation of the flat rate distribution space. For 2024, with an income base amount of SEK 76,200, the flat dividend space is 2.75 times the income base amount, giving an amount of SEK 204,325. This affects the amount of money that can be withdrawn from the company at a lower rate, which is an important aspect of financial planning for business owners.

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