Temporarily reduced employer social security contributions for young people – legislative changes from April 2026 for Swedish employers
The government has decided on a temporary reduction in employer social security contributions for young people, a targeted measure intended to facilitate young people’s entry into the labour market while giving employers a clear financial incentive to hire individuals in this age group. The new law enters into force on 1 April 2026 and means that employers will face lower costs for employees who, at the start of the year, have turned 18 but not yet 23. For Swedish employers, this brings both new opportunities and new requirements for adaptation. In this article, we outline the new rules and what they mean in practice.
The new law is important for anyone working with payroll administration, but also for those in HR, recruitment, or company management. It affects both practical payroll processes and strategic decisions relating to future hiring and recruitment policies. The measure requires system adjustments and careful handling to ensure correct application, while also creating opportunities for increased cost efficiency and contributing to broader economic benefits.
Rules for the temporary reduction
The temporarily reduced contributions mean that only the old-age pension contribution, as well as half of the remaining social security contributions and the general payroll tax, need to be paid. This corresponds to a total contribution level of 20.81%, compared with the standard 31.42%, and applies to taxable income up to SEK 25,000 per month. For the portion of salary exceeding this threshold, social security contributions are calculated as before, meaning the full rate of 31.42%.
The rules are applied according to the cash principle, meaning the reduction applies to all remuneration paid during the period in which the law is in force, even if parts of the salary were earned during other periods. The law enters into force on 1 April 2026 and applies to remuneration paid after 31 March 2026. The reduction period runs until 30 September 2027.
What this means in practice
To ensure correct and efficient adaptation, it is important to understand the practical implications the legislative change has for your organisation. Below, we highlight several areas that should be reviewed to meet the new requirements while also taking advantage of the opportunities created by the change.
Payroll administration and systems
- Ensure that systems can apply the correct contribution levels for the affected age group before the law enters into force.
- Check that both the reduced and the standard contribution (for income above SEK 25,000) are calculated correctly.
- Establish routines for retroactive adjustments in line with the cash principle.
HR and recruitment
- Integrate the reduction into staffing and recruitment planning.
- Support managers with updated information for cost and hiring decisions, without directing selection towards specific ages.
Budgeting and cost calculations
- Update personnel budgets for the period with reduced contributions.
- Calculate and monitor cost savings linked to new hires.
Follow-up and internal analysis
- Monitor financial effects over time and adjust staffing strategies where needed.
By outsourcing your payroll administration to Azets, you can be confident that legislative changes are always applied correctly and on time. If you need support, whether related to system adjustments, process matters, or interpretation of the regulations, our experienced consultants are here to help you move forward.
Contact us at Azets if you would like to know more or receive support in your change process.
