Reduced employer contributions for young people

To support young people in the labour market and make things easier for businesses during the downturn, employer contributions for young people have been temporarily reduced. The reduction applies from 1 April 2026 up to and including 30 September 2027.

As a business owner, this may give you an opportunity to cut your payroll costs by up to around SEK 2 650 per young employee per month. But you need to understand exactly which ages are covered, what caps apply and how to report correctly.

What does the reduction mean?

According to the Government, it is a temporary exception to the current employer contributions, aimed at people who:

• have turned 18 but not yet turned 23 at the start of the year

• receive pay of up to SEK 25 000 per calendar month

In practice, this means the employer only pays the retirement pension contribution plus half of the other social security contributions and of the general payroll tax (allmän löneavgift), a total of 20.81 per cent.

Overall, this means a reduction of around one third of the employer contributions, which, using the contribution rates from Verksamt, can give a reduction of up to around SEK 2 650 per month per young employee.

Which companies are covered by the reduction?

All employers, whatever their legal form, who have employees in the target group can use the reduction. So it is not just large companies, but also smaller limited companies (aktiebolag, AB), sole traders (enskild firma) and associations.

There are, however, some important conditions to be aware of:

• The employee must be 18–22 years old at the start of the year (in 2026 born 2003–2007, in 2027 born 2004–2008)

• The reduction applies to pay of up to SEK 25 000/month

• As the employer, you must report correctly in the employer declaration

The reduction does not apply retroactively, only to pay paid out from 1 April 2026 onwards.

The age limits: who counts as young?

It is not just about the person being “under 23”. Under the law, the reduction applies to anyone who, at the start of the year (1 January), has turned 18 but not yet 23.

Examples:
A person born in 2004 turns 22 in 2026: they are covered.
A person born in 2003 turns 23 in 2026: they are also covered, because they were 22 at the start of the year.
A person born in 2002 is not covered, because they had already turned 23 at the start of the year.

This is important to keep track of, especially if you have many young part-time employees, temporary staff or summer workers.

The pay cap: how does the SEK 25 000 rule work?

The support only applies to pay of up to SEK 25 000/month. If the pay is higher, the full contribution of 31.42 per cent is paid only on the part above SEK 25 000. The first SEK 25 000 always gets the lower rate.

Reporting and handling: how do you report correctly?

The reduction is reported in the employer declaration at individual level, per employee. Make sure your payroll software handles the new contribution rates and that you book the employer contributions to the correct account.

Why is this being introduced, and why now?

Sweden was in a prolonged economic downturn when the reduction was decided, and unemployment among young people was higher than for other age groups. According to the Government’s press release, employment among people aged 19 to 23 is particularly vulnerable, and the need for action is great.

The purpose of the measure is therefore twofold:

1. To lower the barriers for companies to hire young people

2. To improve young people’s chances of getting extra work and experience

This is not the first time similar support has been introduced: during the pandemic there were similar targeted reductions.

What could this mean in practice?

For you as an employer, this could be an opportunity to:

• Keep young employees for longer

• Hire extra help or summer staff at a lower cost

• Offset other rising costs through reduced contributions

Example:
You employ a 20-year-old part-time and pay SEK 22 000 in salary.
Standard employer contributions (31.42 per cent): SEK 6 912
With the reduction (20.81 per cent): SEK 4 578
Difference: SEK 2 334/month

Over a year, that comes to around SEK 28 000 in reduced costs per person on that salary.

How do you prepare?

This is what you should check:

• Identify which employees are covered

• Make sure your payroll accounting and HR systems can handle the change

• Follow the Swedish Tax Agency’s (Skatteverket) instructions for the employer declaration

At Ekonomico, we also recommend that you review your staff budget up to and including September 2027 to see whether the measure creates opportunities to recruit.

Do you need help preparing?

Unsure how the change in the law affects your company?

We help you calculate the effect, adapt your reporting and make sure you can benefit from the support in the right way.

At Ekonomico we have extensive experience of dealing with authorities, so get in touch and we will make sure you don’t miss the opportunity.