Employer cost in Iceland at different salaries
| Salary level | Gross salary | Employer SSC | Mandatory non-tax payments | Total employer cost |
|---|---|---|---|---|
| 67% of AW | 8,330,463 ISK | 6.3% | 11.5% | 9,817,534 ISK |
| 100% of AW | 12,433,527 ISK | 6.3% | 11.5% | 14,652,911 ISK |
| 167% of AW | 20,763,990 ISK | 6.3% | 11.5% | 24,470,362 ISK |
Worked example
The OECD average wage in Iceland for 2025 is 12,433,527 ISK (about $83,563 in US-dollar purchasing power). On top of that salary the employer pays social security contributions of 6.3%, or 789,529 ISK. On top of social security, employers must also make 11.5% in mandatory non-tax payments (mandatory occupational pension), which the OECD reports separately from taxes but which are a real cost of employment. That brings the statutory total to 14,652,911 ISK a year (1,221,076 ISK a month), or 7,045 ISK per hour at 2,080 hours. In 2024 the rate at the average wage was 6.3%, so it was essentially unchanged. The rate stays at about 6.3% even at 167% of the average wage, so it scales with pay.
Iceland ranks #31 of 38 OECD countries for employer contributions at the average wage (OECD average: 16.6%).
Sources: OECD Taxing Wages 2025, comparative indicators (single worker, no children; average wage as defined by the OECD for each country) and OECD, Non-tax compulsory payments as an additional burden on labour income in 2025 (Tables 5 and 6) for mandatory pension and insurance payments that are not classed as taxes, such as Australian superannuation. Model estimates: voluntary benefits, local caps and sector-specific schemes are not included.
Related
Frequently asked questions
How much does an employee cost in Iceland?
At the OECD average wage of 12,433,527 ISK, about 14,652,911 ISK a year including 6.3% employer social security (2025).
What are employer social security contributions in Iceland?
About 6.3% of gross pay at the average wage, 6.3% at 67% and 6.3% at 167% of it (OECD model).