AM-bidrag, A-skat & Top Tax | exploringdenmark

The one-line versionThree terms explain most of your tax: AM-bidrag is the flat 8% taken first; A-skat is the income tax withheld after; top tax is the extra brackets only high earners reach.

AM-bidrag: the flat 8% off the top

AM-bidrag (arbejdsmarkedsbidrag, labour-market contribution) is a flat 8% taken from your gross income before anything else is calculated. It funds unemployment benefit, parental leave and sickness benefit. Every other tax layer is calculated on what's left after it. From 2026, employees under 18 are exempt.

A-skat: the withholding tax

A-skat is the income tax your employer withholds each payday, based on your tax card. It bundles bottom tax (12.01%) and municipal tax (~25%) after your monthly allowance. "A" income is employment income taxed at source; "B" income (freelance, some other sources) is not withheld and you handle it yourself.

Top tax: the higher brackets

Since the 2026 reform, the old single top bracket is three:

Bracket	Rate	Kicks in above (after AM-bidrag)
Middle tax	7.5%	~DKK 641,200
Top tax	7.5%	~DKK 777,900
Top-top tax	5%	~DKK 2,592,700

These stack only on the income above each line - never on your whole salary. The thresholds are measured on personal income after the 8% AM-bidrag is removed.

Pension can pull you under a thresholdContributions to a pension reduce your personal income, which can drop you below a bracket line. For earners just over the middle- or top-tax threshold, topping up pension is often the cheapest way to cut the marginal bite.

Putting it together

Order of operations: gross → minus 8% AM-bidrag → minus monthly allowance → bottom + municipal tax on the rest → higher brackets on the top slices. That's your A-skat. See the whole flow on your payslip, or the layered overview in the tax system for beginners.

Common questions

Is AM-bidrag a tax or a contribution?

Legally a contribution, but in practice it behaves like a flat 8% tax - it's deducted first and you can't avoid it on employment income.

What's the difference between A-income and B-income?

A-income (salary) has tax withheld at source by your employer. B-income (e.g. freelance) has no withholding - you report and pay it yourself.

Do the top-tax thresholds change?

Yes, annually on 1 January. The figures here are 2026 levels; check skat.dk for the current year.

How can I reduce top tax legally?

Pension contributions are the main lever - they lower personal income and can bring you under a bracket threshold.

Verified July 2026 against official sources: skat.dk (Skattestyrelsen), skm.dk (Ministry of Taxation) and borger.dk. Figures are 2026 levels and reset each January - always check skat.dk for your personal numbers. General information, not tax advice - see our editorial policy.

← PreviousUnderstanding Your Danish Payslip (Lonseddel)Next →Sending & Receiving Money Abroad