Iceland has a very high cost of living, with a Cost of Living Index of 98.4, indicating it is nearly as expensive as New York City. Groceries (107.9) and restaurant prices (106.2) are also notably high.

The housing market in Iceland is considered affordable, with a Property Price to Income Ratio of 7.56 years. The Rent Index is 47.66, suggesting that rental costs are moderate compared to New York City.

The average income in Iceland provides excellent purchasing power, reflected by a Purchasing Power Index of 125.82, which is significantly higher than New York City.

Iceland operates a progressive income tax system with national rates up to 37.95% and a flat municipal tax of 14.44%, leading to combined rates up to 52.39%. The standard VAT rate is 24%, with a reduced rate of 11% for certain goods and services. Property taxes are levied at the municipal level, ranging from 0.18% to 1.60% of property valuation.

Iceland's startup ecosystem is dynamic, ranking #35 worldwide in the Global Startup Ecosystem Index 2025. The government supports entrepreneurship with tax incentives and streamlined business registration. Corporate tax rates are relatively low at 20%.

Iceland offers a robust social security system, including universal healthcare coverage that is largely publicly funded, with residents gaining full coverage after six months of legal residency. The pension system is highly regarded, ranked #2 globally in Mercer's 2023 Global Pension Index, comprising a three-pillar structure with mandatory occupational schemes. Unemployment benefits are comprehensive, providing income-related support for up to three (or temporarily six) months.

Deposits in Iceland are protected up to €100,000 (approximately USD 117,210 as of May 3, 2026) per depositor per bank by the statutory Depositors' and Investors' Guarantee Fund (DIGF). Iceland has significantly strengthened its anti-money laundering and counter-terrorist financing (AML/CFT) framework, achieving compliance with most FATF recommendations and exiting enhanced monitoring in October 2020.