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Arctic feedbacks accelerate climate change through carbon releases from thawing permafrost and higher solar absorption from reductions in the surface albedo, following loss of sea ice and land snow. Here, we include dynamic emulators of complex physical models in the integrated assessment model PAGE-ICE to explore nonlinear transitions in the Arctic feedbacks and their subsequent impacts on the global climate and economy under the Paris Agreement scenarios. The permafrost feedback is increasingly positive in warmer climates, while the albedo feedback weakens as the ice and snow melt. Combined, these two factors lead to significant increases in the mean discounted economic effect of climate change: +4.0% ($24.8 trillion) under the 1.5 degrees C scenario, +5.5% ($33.8 trillion) under the 2 degrees C scenario, and +4.8% ($66.9 trillion) under mitigation levels consistent with the current national pledges. Considering the nonlinear Arctic feedbacks makes the 1.5 degrees C target marginally more economically attractive than the 2 degrees C target, although both are statistically equivalent.