The Danish income tax was introduced in 1903 and is now divided into state tax and local tax. The state tax is a progressive tax while the local tax is a flat tax.
The local tax 350-001 varies from municipality to municipality. The highest local tax in 2007 is 26,71 % and the lowest is 20,14 %. Income below DKK 41,000 ($8,000) (2007-level, adjusted annually) is tax exempt.
There are three income brackets for the state tax. In 2007 income from DKK 39,500 to DKK 272,600 is 350-030 taxed at 5,48%, income from DKK 272,600 to DKK 327,200 is taxed at additionally 6% and income above DKK 327,200 is taxed at 15% on top.
All income originating from terms of employment or self-employment are levied a social contribution 640-802 at 8% before income tax. This contribution is widely regarded as "gross tax". The highest total income tax is therefore 62,28%.
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