Dutch Wage Tax Credits 2026: How They Reduce Your Bill
Algemene heffingskorting (general tax credit)
Every Dutch resident taxpayer (not just employees) receives the algemene heffingskorting. In 2026 the maximum is €3,115. It starts phasing out at €29,736 of income at a rate of 6.398% per euro, reaching zero at €78,423 (the upper Box 1 band boundary at €78,426).
At incomes above €78,426, the algemene heffingskorting is entirely gone. This is by design: it is a progressive measure that raises the effective tax rate at higher incomes beyond what the nominal 49.5% bracket rate suggests.
Arbeidskorting (labour tax credit)
The arbeidskorting is available only on earned income (employment, self-employment). It is calculated in three upward phases before starting to taper:
- Up to €11,965: credit builds at 8.324% of income.
- €11,965 to €25,845: credit builds more steeply at 31.009%.
- €25,845 to €45,592: credit continues building at 1.950%, reaching a maximum of approximately €5,576.
- Above €45,592: credit falls at 6.51% per euro, reaching zero at approximately €132,920.
Both credits together: the 2026 table
| Gross income | General credit | Labour credit | Total credits |
|---|---|---|---|
| €30,000 | €3,098 | €5,381 | €8,479 |
| €40,000 | €2,458 | €5,576 | €8,034 |
| €50,000 | €1,819 | €5,398 | €7,217 |
| €60,000 | €1,179 | €4,747 | €5,926 |
| €80,000 | €0 | €3,445 | €3,445 |
| €100,000 | €0 | €2,143 | €2,143 |
How the credits appear on your payslip
Your employer applies both credits month by month in the loonheffing calculation. The monthly credit amounts are one-twelfth of the annual figures, calculated on your annualised monthly wage. You do not see the credits as a separate line on most payslips but they are embedded in the "loonheffing" deduction. If the credit exceeds your loonheffing for the year, the excess can be paid as an uitbetaling heffingskortingen (credit payout) by the tax authority, but only to people with little or no income.
Impact on effective tax rate
Because the credits are capped and phase out at different thresholds, the effective income tax rate does not simply follow the Box 1 brackets. At €40,000 gross, the combined credit of €8,034 reduces the effective rate well below the 35.75% first band rate. At €100,000, both credits have declined, pushing the effective rate much closer to the Box 1 rates. See the Box 1 tax guide for effective rate examples.
Frequently asked questions
Do I need to apply for the arbeidskorting and heffingskorting?
No. Your employer applies both credits automatically in the monthly payroll calculation. The loonheffing (wage tax) deducted from your payslip already reflects them. If you do not work (for example, you have no employment income), you cannot claim the labour tax credit, but may still receive a partial algemene heffingskorting via the benefit system.
Why does the arbeidskorting phase out at higher incomes?
The labour tax credit is designed to make working financially rewarding relative to receiving benefits. At higher incomes the incentive effect is considered less necessary. The phase-out starts above €45,592 and reaches zero at €132,920 in 2026. Above that income level you receive no arbeidskorting, though the (smaller) algemene heffingskorting may still apply depending on your income.
Can I claim these credits if I work in the Netherlands but am a non-resident?
Partial non-resident taxpayers who qualify under the opt-in rules can claim the credits at a reduced level. Full entitlement applies to resident taxpayers and qualifying non-residents who earn at least 90% of their income in the Netherlands. The details depend on your tax residency status and tax treaty provisions.
Source: Belastingdienst Nieuwsbrief Loonheffingen 2026 (Uitgave 3). Last updated 2026-11-04.