The annual personal income in Iceland was 7.1 million ISK on average in 2020 or 591 thousand ISK per month. The median of the annual personal income was 5.9 million ISK or 488 thousand ISK per month. Since 2017, the average total income has increased by 3%, but when adjusted for inflation it remains at a similar level.
Explanation: Total income adjusted for inflation.
In this context, it is worth pointing out that the personal income reflects the individual income, and the youngest age groups usually still live in their parental home. In 2020, the total income was lowest in the youngest age group, or about 117 thousand ISK per month for 16-19 year olds and 318 thousand ISK for 20-24 year olds. The highest personal income is found in the age group 45 to 49 years, or 786 thousand ISK per month.
Changes in the composition of total income
Composition of total income changed in 2020 compared with previous years, with a proportional increase in other income. Total income is composed of income from work, capital income and other income. Other income includes e.g. unemployment benefits, social insurance administration and pension fund.
In 2020, other income increased by 20.3% between years (adjusted for inflation), as the share of total income went from 20.6% to 24.7%. The increase in other income in 2020 can be attributed, to the Covid-19 pandemic. The amount of income due to unemployment benefits increased by 240% between years and social assistance by 31%, at 2020 prices. In 2020 a special child support supplement was paid.
Income from work includes wages and other related work income such as car benefits, daily allowance and other benefits. Capital income includes interests, dividend, profit from sales and rental income excluding business. Other income consists of all other income, payments from pension funds, the Social Insurance Administration and other compensations such as unemployment benefits and interest and child support reliefs. Scholarships, lottery winnings and some other incomes are also included in other income.
About income statistics from tax returns
Statistics Iceland has published statistics on personal income for the period 1990 to 2020 by municipality, age and sex. This comprises total income as well as income from earnings, capital gains and disposable income including other income and taxes. Results are based on individuals’ tax returns.