General income is a net income tax base and is calculated for all taxpayers, both companies and individuals. It includes all taxable income from work, business and capital. Tax allowances and reliefs are deductible in the computation of general income. The most important of these are interest payments on debts and a basic tax allowance on wage and pension income. The latter does not, however, apply to wage income from self-employment. In addition to the basic tax allowance, travel expenses to and from work exceeding a fixed amount each year, trade union fees, gifts to voluntary organisations, documented expenses for child care etc. are deductible. A standard allowance is deducted according to the income class to which the taxpayer belongs (see below).
Personal income is a gross income tax base. It is the total amount of gross wage and pension income, from which social security contributions and surtax are calculated. Wage income is a broad term that is defined as the sum of wages, income from self-employment that is related to labour input and fringe benefits such as company cars, free phone, free stock options etc. In general, all kinds of fringe benefits are regarded as personal income.
The personal tax system is divided into two tax classes, class 1 and class 2. The main difference is that the standard allowance in class 2 is twice the allowance in class 1. Single individuals are all taxed in class 1. Married couples can choose the tax class that implies the lowest total tax. Consequently, single-income couples are in general, taxed in class 2, while double-income couples are usually taxed in class 1. Single parents are always taxed in class 2. Pensioners with low income and single parents receiving transitional benefit can alternatively be taxed according to a special tax limitation rate if this implies lower tax than the ordinary rules.
The highest marginal tax on wage income is currently 47.8 per cent. Persons living in the county of Finnmark and the northern part of Troms county have in general lower tax rates on ordinary income, lower surtaxrate and a special allowance.
There is a savings scheme offering specific tax relief (BSU), for persons under 34 years of age who are saving in purpose of buying a dwelling. The current annual savings limit is NOK 20 000 with income tax relief at 20 per cent of the annual amount saved.
The upper limit for accumulated savings is NOK 150 000.
Wealth tax is levied at both municipal and central government level. The tax base is net wealth less a basic deduction. The current basic deduction is NOK 200 000. As a consequence of basic deduction in combination with gentle assessment rules, especially for housing and non-listed shares, the wealth tax is of little importance to many tax-paying households. The municipal tax rate is currently 0.7 per cent, while the national tax rate is progressive to a maximum of 0.4 per cent.