Denmark Cuts Electricity Tax

Denmark’s parliament has approved a sharp reduction in the electricity tax to the lowest level permitted under EU law. From 1 January 2026 and throughout 2027, the tax will be reduced from 72.7 øre to just 0.8 øre per kilowatt hour. The measure, previously announced by the government, has now been formally adopted and represents one of the most significant tax cuts for households in recent years.

Because the electricity tax is a flat charge added to the unit price of power, the reduction will be directly reflected in consumer bills regardless of fluctuations in wholesale electricity prices.

How much households will save

According to government estimates, a typical family consisting of two full-time working adults and two children living in a detached house could save up to 4,000 kroner per year on energy bills. A retired couple, whose electricity consumption is generally lower, is expected to save around 2,700 kroner annually.

The actual savings will vary depending on consumption levels, with households using more electricity benefiting most from the tax reduction.

Rationale behind the tax cut

Tax Minister Ane Halsboe-Jørgensen said that rising prices have made it increasingly difficult for many Danes to manage everyday expenses. Cutting the electricity tax is therefore intended as a tangible first step to ease cost-of-living pressures and provide visible relief to households.

Although consumers will continue to pay grid and transport fees, the electricity tax itself has historically been a significant component of the total electricity bill.

Social and economic implications

The Confederation of Danish Industry welcomed the decision, highlighting its positive impact on lower-income households. Since energy costs represent a relatively larger share of expenditure for people with limited incomes, reducing the electricity tax can contribute to greater financial equality.

Business groups have also expressed hope that the reduced tax rate will remain in place beyond 2027, providing longer-term certainty for consumers and companies alike.



As reported by International Investment experts, Denmark’s move to cut electricity tax to the EU minimum delivers both social and economic benefits. By easing pressure on household budgets while reducing structural energy costs, the measure strengthens resilience at a time of energy transition and ongoing price volatility.