The Danish government presented its 2027 finance bill on October 9, proposing to abolish the middle tax bracket and to cap deductions for mortgage interest.
According to DR, the proposal contains billions of kroner in tax cuts for next year. The bill, which runs to more than 3,000 pages, was handed to Finance Minister Peter Hummelgaard of the Social Democrats.
At the center of the plan is the removal of two brackets that only took effect on January 1, 2026, the mellemskat and the toptopskat. The Ministry of Taxation states that scrapping the middle tax would give an average annual saving of 7,100 kroner to 619,000 taxpayers. Tax Minister Jakob Engel-Schmidt said in a press release that he is a minister for lower taxes and more growth.
Who gains and who sees little change
Calculations made for DR by the pension company PFA show clear winners and losers. According to PFA private economist Camilla Schjølin, the winners are seniors and people with a gross salary above 58,000 kroner a month. For a person on an average income, she says, there are no major changes to household finances.
In 2026, the middle tax adds 7.5 percent on the part of personal income, after labor market contribution, between 641,200 and 777,900 kroner a year. Income above that level is taxed with the classic top tax of a further 15 percent. Under the proposal, only bottom tax would apply up to the top tax threshold, which in 2027 sits just above 800,000 kroner.
The toptopskat, which the government also wants to remove, is an extra 5 percent on personal income above 2,592,700 kroner a year in 2026. The bill also sets aside 2.1 billion kroner for a new permanent benefit for pensioners with the lowest incomes and wealth.
A ceiling on interest deductions
Under current rules, all interest expenses can be deducted from taxable income. The bill would limit that deduction to 300,000 kroner for a couple and 150,000 kroner for a single borrower. DR cites calculations from Nykredit and Spar Nord based on a home bought with 95 percent financing.
In DR’s example, a couple borrowing seven million kroner at a fixed rate of 5 percent would face annual interest costs of just over 400,000 kroner including the mortgage contribution rate. The final 100,000 kroner could not be deducted, producing a tax increase of just over 25,000 kroner a year. DR notes that owners borrowing such sums would likely also gain from the removal of the middle tax.
Other parts of the bill have drawn criticism. The proposal would remove SU for 81,000 students over 18 living at home whose parents earn more than 710,000 kroner before tax. TV2 has reported that 18,000 families entitled to a food check are now assessed as earning enough for a student in the household to lose SU.
What the proposed tax changes mean for internationals
Anyone taxed under the ordinary Danish rules pays bottom tax, municipal tax and, above set thresholds, the brackets described above. These thresholds are applied automatically through the forskudsopgørelse, the preliminary income tax assessment registered with the Danish Tax Agency. If the bill passes, foreign residents earning above roughly 58,000 kroner a month would see the middle tax disappear from that calculation, according to PFA’s figures for DR.
You can model the effect on your own pay with a Danish tax calculator, but the numbers remain a proposal, not law.
The interest deduction cap would matter most for residents with large mortgages, including recent buyers who financed near the top of the market. DR’s reporting does not state when a cap would take effect for existing loans, and the finance bill must still be negotiated in the Folketing before any of these rules apply.
