How Dutch income tax works
Income from work and your home is taxed in box 1. The box 1 rate combines two things: income tax proper and national insurance contributions (state pension AOW, survivor benefits Anw and long-term care Wlz). Together they make up the first-bracket rate. The system is progressive: the more you earn, the higher the rate on the slice of income that falls into a higher bracket. Savings and investments are taxed separately in box 3, and substantial shareholdings in box 2.
Tax brackets 2026 (below state pension age)
| Taxable income | Rate |
|---|---|
| up to €38,883 | 35.75% |
| €38,883 to €78,426 | 37.56% |
| over €78,426 | 49.50% |
A common misunderstanding is that you pay 49.5% on everything once you reach the top bracket. You don't: only the part above €78,426 is taxed at 49.5%.
Tax credits
Tax credits (heffingskortingen) are subtracted from the tax, so lower incomes pay relatively less:
- General tax credit (algemene heffingskorting): up to €3,115 in 2026. Above an income of €29,736 it falls by 6.398% of the excess, reaching zero at about €78,426.
- Employed person's tax credit (arbeidskorting): for people who work, employed or self-employed. Up to €5,685 at an employment income of about €45,592, then falling by 6.51% to zero at €132,920.
Your employer normally applies these credits each month through wage tax, provided you asked for the loonheffingskorting to be applied (only at one employer at a time).
Example: €50,000 gross a year
- bracket 1: €38,883 × 35.75% = €13,900.67
- bracket 2: €11,117 × 37.56% = €4,175.55
- tax before credits: €18,076.22
- general tax credit: €3,115 − 6.398% × (€50,000 − €29,736) = €1,818.51
- employed person's credit: €5,685 − 6.51% × (€50,000 − €45,592) = €5,398.04
- tax payable: €10,859.67, on average 21.7% of income
That leaves about €39,140 a year, or roughly €3,260 a month, before pension contributions and other deductions.
Average and marginal rate
Your average rate is total tax divided by income: 21.7% at €50,000. Your marginal rate is what you pay on one extra euro. It is often higher than the bracket rate because tax credits shrink as income rises. At €50,000 an extra euro costs 37.56% tax, plus 6.398% less general credit, plus 6.51% less employed person's credit: 50.5% in total. Worth knowing before you negotiate a raise or extra hours.
| Gross annual income | Tax | Average | Marginal |
|---|---|---|---|
| €20,000 | €547 | 2.7% | 4.7% |
| €30,000 | €2,246 | 7.5% | 40.2% |
| €40,000 | €6,286 | 15.7% | 42.0% |
| €50,000 | €10,860 | 21.7% | 50.5% |
| €75,000 | €23,477 | 31.3% | 50.5% |
| €100,000 | €37,289 | 37.3% | 56.0% |
Deductions and the 30% ruling
Deductions lower your taxable income. The best known is mortgage interest relief: the interest you paid minus the notional rental value of your home (eigenwoningforfait). Others include annuity premiums, gifts to charities and certain medical costs. Most deductions are capped: if they fall in the top bracket you get back at most 37.56%. The calculator applies that cap.
If you are an expat on the 30% ruling, part of your salary is a tax-free allowance. Enter only your taxable salary (for example 70% of your gross pay) as income.
What is not included
The calculator assumes you are below state pension age and have no tax partner. It does not include the income-related combination credit for parents, the elderly credits, box 2 and box 3, allowances (toeslagen) or the income-related health insurance contribution. You file your return with the Belastingdienst by 1 May of the following year. For your monthly take-home pay, use the Dutch take-home pay calculator.
Frequently asked questions
How much tax do I pay on €40,000 in the Netherlands?
With employment income, about €6,286 a year, or 15.7% on average, after the general tax credit and the employed person's tax credit.
What are the Dutch tax brackets for 2026?
35.75% up to €38,883, 37.56% up to €78,426 and 49.5% above that, for people below state pension age.
What is the difference between wage tax and income tax?
Wage tax (loonheffing) is the advance your employer withholds each month. Your annual income tax return settles the final amount; you get a refund or pay the difference.
Why is my marginal rate higher than 49.5%?
Because the employed person's credit keeps shrinking until €132,920. Between €78,426 and €132,920 an extra euro costs 49.5% plus 6.51% less credit, so 56%.
Does holiday allowance count?
Yes. Holiday allowance, a 13th month and bonuses are part of your annual income and are taxed in the same brackets.
Does this apply to pensioners?
No. Above state pension age you no longer pay the AOW contribution, so the first-bracket rate is lower, and other credits apply. This calculator is for people below state pension age.
Last reviewed: 2026-10-06. Results are estimates for information only.