Box 1 Tax in the Netherlands 2026 Explained
The three Box 1 brackets in 2026
The rates below are the combined Box 1 rate, which bundles income tax and national insurance premiums (AOW, Anw, Wlz) into a single withholding figure. National insurance premiums are only charged within the first bracket.
| Bracket (Schijf) | Income range | Rate |
|---|---|---|
| Schijf 1 | €0 to €38,883 | 35.75% |
| Schijf 2 | €38,883 to €78,426 | 37.56% |
| Schijf 3 | Above €78,426 | 49.5% |
Two credits that reduce the levy automatically
Every employed taxpayer receives two non-refundable tax credits that are applied directly to the calculated levy:
- Algemene heffingskorting (general tax credit): up to €3,115, phasing out above €29,736 at 6.398% per euro, reaching zero at the top of Schijf 2.
- Arbeidskorting (labour tax credit): builds up to roughly €5,685 through three rising phases, then phases out above €45,592 at 6.51% per euro.
Your employer calculates both credits for each payroll run and subtracts them from the raw bracket tax before deducting loonheffing from your gross pay.
Worked example at €40,000
| Item | Amount |
|---|---|
| Gross annual salary | €40,000 |
| Raw bracket tax | €14,320.22 |
| Algemene heffingskorting | -€2,458.31 |
| Arbeidskorting | -€5,576.04 |
| Loonheffing (net levy) | €6,285.87 |
| Net annual take-home | €33,714 |
| Net monthly | €2,810 |
Worked example at €60,000
| Item | Amount |
|---|---|
| Gross annual salary | €60,000 |
| Raw bracket tax | €21,832.22 |
| Algemene heffingskorting | -€1,178.71 |
| Arbeidskorting | -€4,747.12 |
| Loonheffing (net levy) | €15,906.39 |
| Net annual take-home | €44,094 |
| Net monthly | €3,674 |
The figures above include the statutory 8% holiday allowance (vakantiegeld) in the gross, which is the standard way Dutch salaries are quoted. The gross figure is base salary multiplied by 1.08. See the vakantiegeld tax treatment guide for details on how the May payout affects your take-home in that month.
How loonheffing appears on your payslip
Your employer remits a single loonheffing amount to the Belastingdienst each payroll period. This covers both the Box 1 income tax component and the national insurance premiums. You will see it as one line on your payslip labelled "loonheffing" or "inkomstenbelasting/premies volksverzekeringen". Unlike some countries, Dutch employees pay no separate health insurance premium through payroll: the ZVW and WW premiums are employer costs.
Frequently asked questions
What is the difference between Box 1, Box 2, Box 3?
Box 1 covers wages, pensions and income from your primary home (eigenwoningforfait). Box 2 covers substantial shareholdings (5% or more), taxed at a flat 31% in 2026. Box 3 taxes notional returns on savings and investments at a deemed yield, regardless of actual income. Most employees only deal with Box 1.
Why does my effective tax rate look much lower than 49.5%?
The 49.5% rate only applies to the slice of income above the third bracket threshold. Income below the threshold is taxed at 35.75% and 37.56%. On top of that, the general tax credit (algemene heffingskorting) and the labour tax credit (arbeidskorting) reduce the total levy, often by several thousand euros, bringing the effective rate down significantly at typical salaries.
Do I owe more tax at year-end even if my employer withholds automatically?
For most employees the loonheffing withheld from each paycheck matches the annual liability closely, so no return is required. A difference can arise if you have multiple income sources, a deductible mortgage, untaxed benefits, or if the 30% ruling was applied incorrectly. Filing the annual M-form or P-form allows you to claim any overpayment back or settle a shortfall.
2026 Box 1 parameters per Belastingdienst Nieuwsbrief Loonheffingen 2026 (Uitgave 3). Last updated 2026-11-04.