“The proposed National Budget for next year will support the continued positive development of the Norwegian economy. Consumer price growth is coming down, purchasing power is increasing and Norwegian businesses are thriving,” says Finance Minister Jens Stoltenberg (Labour Party).

Security for the economy

The Government proposes to reduce income tax by more than NOK 4 billion by, among other things, increasing the personal allowance and reducing National Insurance on wages, benefits and business income.

“With this proposal, we ensure widespread tax relief and make work more profitable, whilst retaining a redistributive tax system,” says Mr Stoltenberg.

In total, the Government proposes to allocate NOK 11.5 billion to Norway’s Price electricity support scheme and the household electricity subsidy programme. Further, we propose to reduce electrical power tax by NOK 4 billion.

“Households and businesses will benefit from reduced electrical power tax and household electricity bills may become more predictable in the future,” says Finance Minister Stoltenberg.

The Government proposes that families should pay a maximum fee of NOK 1,200 per month for a kindergarten spot, and NOK 700 per month in the least central municipalities. Kindergartens in the initiative zone in Finnmark and the northern part of Troms will continue to be free.

A family with one child attending kindergarten saves around NOK 31,000 per year compared to the maximum fee’s adjusted price in 2021. Families in the least central municipalities save around NOK 37,000 per year, whilst families in the initiative zone will save around NOK 45,000 per year.

The Government proposes to continue the implementation of 12 hours of free wraparound care for pupils in Years 1, 2 and 3.

Security for society

“In order for municipalities and county councils to provide basic welfare services, a good and predictable economy is crucial,” says Mr Stoltenberg.

Grants to the municipal sector were increased by NOK 1.6 billion in the revised National Budget for 2025. The Government aims to further increase the unrestricted income of the municipal sector by NOK 4.2 billion in 2026. 

Hospital grants will be increased by NOK 3.4 billion to contribute to increased activity mainly because the population ageing and growing. In addition, the Government proposes to grant loans for five new hospital developments. In total, the Government proposes to fund investment loans to the sum of around NOK 7 billion in 2026.

The Government is following up the escalation plan for mental health, where the objective is to increase funding by NOK 3 billion over the course of ten years.

The National Insurance Scheme accounts for approximately a third of the National Budget and ensures incomes, including during illness and old age. Compared to the budget adopted last autumn, expenditure has increased by NOK 15.6 billion, excluding wage and price growth. The largest single increase is in retirement pensions which in part is due to population ageing.

Security for the country

“In order to face heightened threats to security and permanent changes in the security policy situation, we must prioritise support to Ukraine and the strengthening of our own defence. I believe it is important that Norway continues to support the Ukrainian people and their fight for liberation. This will also strengthen our own security,” says the finance minister.

Norway will in 2026 also provide military and civilian support to Ukraine through the Nansen programme. The Government proposes a total of NOK 85 billion in 2026 – the same as in 2025.

The Government proposes to increase the defence budget in line with the long-term plan for the defence sector. This entails NOK 4.2 billion in increased funding. In total, it is estimated that defence expenditure will amount to 3.4 per cent of the gross national product (GDP) in 2026.  

The white paper on total preparedness is being followed up, whereby complex threats, digital resilience and coordinated preparedness is prioritised. In addition, preparedness in Svalbard is being increased. 

The Government is boosting work to prevent and fight crime through initiatives which include higher basic funding to the police, increased efforts to combat child and juvenile crime and an expansion of the scheme for fast tracking young criminals. Further, the Government is prioritising increased student admissions to the Norwegian Correctional Service, increased staffing in prisons and more places in juvenile units.

The Government proposes that the framework for foreign aid shall be equivalent to 1 per cent of the estimated Gross National Income (GNI) in 2026. This entails NOK 56.6 billion in funding.

Improvement of the tax and VAT system

Practically all new passenger vehicles in Norway are now electric. Thus, VAT benefits when purchasing such vehicles has in practice become a general NOK 17.5 billion subsidy scheme for purchasing a vehicle.
It is time to phase out the EV benefits in the VAT system. Initially, the price threshold for VAT on electric vehicles will be reduced from NOK 500,000 to NOK 300,000 next year. From 2027, the zero-rate will be removed.

“The phasing out of EV benefits will give us the opportunity to reduce other taxes and levies, which corresponds to the Government’s tax pledge stating that if any taxes are increased others will be reduced,” the finance minister points out.

The Government proposes to increase carbon taxes by 14 per cent in 2026 in line with the plan to increase the general level to NOK 2,400 per tonne of CO2 in 2030 (measured in 2025 prices). In addition, the Government is announcing that the increase will continue at the same pace after 2030 as well to a taxation level of NOK 3,400 per tonne of CO2 in 2035.

“We are strengthening use of carbon taxes, one of our most important instruments in reducing emissions. The Government’s climate change policy contributes to continued reduction of Norway’s greenhouse gas emissions,” says the finance minister.

Despite the fact that climate change policy has been strengthened in several areas, this year’s climate status and action plan shows that it will be extremely difficult for Norway to meet its climate change obligations for 2030 solely through domestic measures. The Government will therefore work along several tracks to fulfil Norway’s obligations in the Paris Agreement and the climate change agreement with the EU. Reference is made to attachment Prop. 1 S (2025-2026) for the Ministry of Climate and Environment The Government’s Climate Status and Action Plan for a comprehensive overview of instruments in the Government’s Climate Action Plan.

The budget includes proposals to fill several evident loopholes in the tax system. It is proposed to remove the ability of financial institutions with operations abroad to obtain interest deductions twice and to close a loophole in the VAT rules for international trade with services.  A tax loophole in the property sector where capital gains taxation can be evaded through targeted tax planning is also being closed.

Savings, re-prioritisations and improved resource use

“If we are to manage the economy by means of a responsible economic policy, our priorities must be defined, so we can create space for more efficient use of capital and labour,” says Jens Stoltenberg.

The Government proposes to cut some business support schemes by approximately NOK 400 million to release funds for other purposes.  

Further, the government proposes to reduce the credit provided to Green Industrial Financing by 900 million NOK, and that remaining loss provisions for the loan scheme for the construction of environmentally friendly ships should be returned to the state treasury.

Since the Government came into power, it has focused on Enova as a key instrument in stimulating climate and energy transition. In 2026, the Government proposes to reduce the transfer to the Climate and Energy Fund by around NOK 1.9 million to NOK 7.2 billion. This is NOK 3.9 billion more than in 2021 and will give Enova significant funds to continue supporting the development of climate and energy technology.

The Government proposes several measures to improve the running of the public sector. In the hospital sector, a streamlining requirement of NOK 300 million is being proposed within administration and the purchase of advisory services. This will give more room for funding other activities.

In line with advice from police experts, the Government proposes to close 14 passport offices and replace the service with passport buses. Restructuring in the justice sector will save more than NOK 100 million, which will be used for services the police need more.  

Likewise, the government plans to streamline NOK 700 million in the Norwegian Armed Forces to help finance ambitions in the long-term plan.

The Government’s proposals for objectives under the National Transport Plan (NTP) give a nominal increase of NOK 1.5 billion. Operations and maintenance are prioritised. No cost frameworks for starting up new large investment projects are proposed in the 2026 budget.

The Government proposes to cease work on the Stad Ship Tunnel. Stopping the project will result in significant savings in the coming years. All received tenders are considerably higher than the cost framework adopted by the Storting in 2021. The updated cost framework for the project is NOK 9.4 billion.

We must get more people working

“Our goal is to get more people working and fewer on benefits. A large number of people are economically inactive, regardless of whether they are able to or want to work. This is a detriment to the individual and to society,” says the finance minister.

The Government proposes to implement a randomized controlled trial with an in-work tax allowance for young people. The Government believes more knowledge is needed on how a work allowance and financial incentives in general affect labour supply and employment.

The transitional benefit raises the threshold for single parents participating in the labour market. It can create a poverty trap and counteract integration.

In line with the recommendation of the expert committee for families with children ˈBarnefamilieutvalgetˈ stating that such benefits should be revoked, the Government therefore proposes to start phasing out the benefits for single parents for most recipients. When fully phased out, the total savings will amount to around NOK 1.3 billion.

In the proposed budget for next year, the Government aims to increase the use of labour market measures and to implement two experiments that will ensure that young people rapidly gain access to and start employment-orientated follow-up.

A recruitment programme is also proposed for the health and care sector for young people excluded from the labour market and education.

A budget for responsible economic management

“Fiscal policy for 2026 is continued responsible economic management,” says Finance Minister Jens Stoltenberg.

Fund spending in 2026 is estimated at NOK 579 billion. This corresponds to 2.8 per cent of the value of the Government Pension Fund Global (GPFG). Fund spending must be seen in relation to the extraordinary support to Ukraine, which is proposed to continue at a level of NOK 85 billion.

“According to the Ministry of Finance’s calculations, fiscal policy for 2026 will have an approximately neutral effect on activity in the economy next year,” says Finance Minister Jens Stoltenberg.

Table 1 Key figures for the Norwegian economy. Percentage change from the previous year unless otherwise stated.

 

BNOK1

        

 

2024

2024

2025

2026

2027

  Private consumption

2,051

1.4

2.4

2.4

1.9

  Public consumption2

1,184

2.4

2.2

2.8

1.2

  Gross investment in fixed capital

1,143

-1.4

1.4

0.6

2.1

  Hereof: Oil extraction and pipe transport

253

9.8

4.0

-7.0

-6.5

              Companies in mainland Norway

424

-2.9

2.4

2.9

2.3

              Dwellings

170

-19.1

-5.2

11.7

11.9

              Public administration

286

3.9

1.7

-2.6

2.3

  Demand from mainland Norway3

4,115

0.3

2.0

2.6

2.2

  Public-sector demand

1,470

2.7

2.1

1.7

1.4

  Exports

2,468

5.2

-1.2

0.6

0.2

  Hereof: Raw oil and natural gas

1,169

6.7

-2.7

-0.5

-1.6

             Goods and services from the mainland

1,111

4.0

2.8

2.4

2.3

  Imports

1,760 

4.3

1.4

2.0

2.4

  Gross domestic product

5,197

2.1

0.4

1.2

0.7

Hereof: Mainland Norway

4,050

0.6

2.0

2.1

1.8

Other key figures:

          

  Employment

  

0.5

0.8

0.7

0.4

  Unemployment rate, registered (level)

  

2.0

2.1

2.1

2.1

  Unemployment rate, Labour force survey (level)

  

4.0

4.5

4.5

4.5

  Annual salary

  

5.6

4.4

4.0

3.5

  CPI

  

3.1

2.8

2.2

2.2

  CPI-ATE

  

3.7

2.9

2.5

2.3

  Raw oil price, USD per barrel (current prices)

  

80

70

67

67

  Three-month money market interest (rate)4

  

4.7

4.4

4.0

3.6

  Import-weighted krone exchange rate5 

  

0.8

-0.4

-0.4

0.0

1 Interim national accounting figures for 2024 with current prices. Growth rates from this level are stipulated as volume.

2 For 2027, the estimates for public-sector consumption and investment of technical prerequisites regarding demographic development trends, and estimated impact on the long-term plan for the Norwegian Armed Forces.

3 Excluding changes in stock.

4 Corresponds to the prognosis for money market interest in Norges Bank’s monetary policy report 3/25.

5 Positive figures indicate a weaker NOK.

Sources: Statistics Norway, Norges Bank, Norwegian Labour and Welfare Administration (NAV), Reuters, ICE, Macrobond and the Ministry of Finance.

Table 2 Key figures in the National Budget and the Government Pension Fund Global in BNOK

 

2024

2025

2026

Total revenue

2,323.8

2,280.0

2,269.6

1          Revenue from petroleum activities  

750.7

695.0

557.4

            1.1 Ordinary and special taxes  

420.3

383.8

302.5

            1.2 Other petroleum revenue   

330.3

311.2

254.9

2          Revenue not related to petroleum revenues  

1,573.1

1,585.1

1,712.2

            2.1 Ordinary and special taxes from mainland Norway        

1,397.8

1,421.4

1,560.2

            2.2 Other revenues     

175.3

163.7

152.0

Total expenditure   

1,953.3

2,104.0

2,200.6

1          Expenses for petroleum activities  

48.5

31.4

36.1

2          Expenses not related to petroleum activities  

1,904.8

2,072.7

2,164.5

Profit in the National Budget before transferral to the Government Pension Fund Global     

370.5

176.0

69.1

-           Net cash flow from petroleum activities

702.2

663.6

521.3

=          Non-oil profit 

-331.7

-487.6

-452.2

+          Transferred from the Government Pension Fund Global          

346.5

487.6

452.2

=          Profit in the National Budget  

14.7

0.0

0.0

+          Net allocations in the Government Pension Fund Global        

355.7

176.0

69.1

+          Interest and dividend income, etc., in the Government Pension Fund Global1  

422,1

446,7

482,5

-           Transfer from the Government Pension Fund Global

0.0

11.7

12.3

=          Total profit in the National Budget and Government Pension Fund1

792.6

611.0

539.3

Memo:

      

Interest and dividend income, etc., in the Government Pension Fund Global

402.8

428.1

461.0

Market value of the Government Pension Fund Global2          

15,761

19,735

20,500

Market value of the Government Pension Fund2        

16,115

20,116

20,910

National Insurance Scheme’s obligations towards old age pensioners2,3 

10,765

11,423

11,496

Structural non-oil fiscal deficit

410.3

534.2

579.4

     Percentage of the Government Pension Fund Global

2.6

2.7

2.8

     Percentage of mainland Norway’s trend GDP

10.2

12.6

13.1

          Change from previous year as percentage points (fiscal impulse)

0.9

2.4

0.4

Estimated contribution from the budget proposal on mainland Norway’s GDP in 2026, percentage4

-

-

0.1

Real underlying increase in expenditure, percentage

-

-

1.0

1 Does not include exchange gains or losses.

2 At the beginning of the year.

3 Current value of rights that have already been earned to future old age pension payments in the National Insurance Scheme.

4 Based on calculations using the KVARTS and NORA macroeconomic models.

Sources: The Ministry of Finance and Statistics Norway.