Calculator: Simple tax estimates

Daniel pointed me at this official tax calculator over at skat.dk. Before playing with it I knew the basics of how tax was calculated – enough for making plans. But I didn’t know all the specifics. I still can’t say I do but I played around with the calculator a lot to try to better understand exactly how taxes are calculated. One thing that bothered me was how cumbersome it was to have to re-enter my personal info each time and go to the right inputs. So, I made this small tool to calculate taxes based on some simple input:

Just choose a year (2016 or 2017), your municipality, if you are a member of the state church and then fill in your income split in salary, stock and capital gains. This sheet then estimates your tax and calculates your effective tax rate. There is a sheet in Danish and one in English. If you want to check the output after you’ve run some numbers you can use Rubrik 11 in the official form for salary, Rubrik 32 for capital gains and Rubrik 66 for stocks.

I don’t have any comments for now except that you can keep a very low effective tax if you can live on less than 83,000 kr or so per person. If you need less than about 40,000 kr then you have zero tax by using capital gains (say bonds or ETF’s outside of retirement accounts). If you need 40-80,000 kr you can do that at less than 15% effective tax (27% marginal) by utilizing any combination of capital gains and stock returns. After that point you will be paying around 40% marginal tax so if you can stay within those limits it will be much cheaper in taxes.

Comment here with any mistakes you find and I will correct them.

8 thoughts on “Calculator: Simple tax estimates”

  1. Hi Asbjørn,

    I don’t understand why your effective tax is so low on stock profit less than 90.000,- kr?

    Stock profit from a brokerage account has a 27/42% flat stock tax, have they not? Or does the “bundfradrag” include profit from stocks?

    Also, why do one pay a lower tax when member of the church?

    1. Anders, the effective tax is so low in that scenario because the ‘personfradrag’ applies to the 42% tax of the aktieindkomstskat, but it does not apply to the 27% part for some reason. This isn’t a realistic scenario for most people though, as the personfradrag would go to ‘personal income’ from folkepension or some other pension if you are retired, or it would go to your job salary. But yes, the aktieindkomst in the interval 51700 DKK to about 91000 DKK are pretty much tax free if you have NO OTHER income.

      The reason for the difference that being a member of the church is that the “Modregnet skatteværdi af personfradrag, kommune” is higher when you are a member, about 352 DKK (for Københavns Kommune at 0.8% tax). I’m not completely sure, but I guess that the extra tax somehow make you get more out of your personfradrag that then applies to the 42% tax.

      1. Thank you, makes sense.

        Am I the only one who are pleasent surprised by the tax calculator?

        I mean, if you can live on 120.000 post tax you would have an effective tax rate of 27%. That’s pretty good. With a paid off house, or something near a paid off house/apartment, that could be manageable.

        1. Hi Anders

          I too find that taxes post retirement are fairly manageable. It is in the growth phase that they really interfere. Also do remember that those ~27% has to come out of stock gains if you want a sustainable wealth so an equivalent to a 4% american withdrawal rate would be closer to 2.92% here in Denmark which is a pretty big difference. It means we will have to get closer to 40 times yearly expenses rather than 25 if we want it to last 30 years with high probability.

          Currently I think we’re aiming for spending at around 200,000 combined after we pay off the mortgage but a lot can change between now and then 🙂

          Best regards

  2. Hi, some feedback.
    For some reason my webpage jumps to the top of the page every time I select a cell in the table and the ‘focus’ is not the cells, so even if you use the scroll bar within the table, it still jumps to the top when you select a cell.
    Can you make an option to change the progressiongrænse aktier to ‘married’ or just double amount? and a way to turn off the AM-bidrag would be cool to, since you don’t pay that from “rate og – livrentepension” 🙂

    It’s interesting that you can have a 15.34% tax rate if your only income is Aktieindkomst at 91’000 kr, AND that you actually save taxes by being a member of the Folkekirke, that’s counter-intuitive.

    1. Thanks!

      I’ll see if I can fix the webpage jumps, but I’m not sure where to start. I guess this is just another reason to move to form-based calculators instead of embedded sheets sooner rather than later 🙂

      I’ll try to add an input field for income that is not taxed with AMB. I want it to be fairly complete while simultaneously trying to keep it simple. I figured I wouldn’t create a “married”-option since I thought that’d clutter it – especially if you have different status on church or different municipalities – personally I just halve/double my numbers to get a good estimate or I can use the official calculator if I want a precise number in a very specific situation.

      And yeah 15% effective tax is awesome. Also, note that the 15.34% is if you realize GAINS for 91000 kr so you can sell more and still be on that low effective tax. I think our goal is to be able to live on about 200,000 once we’ve paid off the house and if we can manage that then taxes won’t be too big a concern in retirement. Now however they’re obliterating my paychecks 😉

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