Prinsjesdag 2026: income tax measures
There’s plenty of news about income tax this year. Read on to find out the government’s main proposals for each box. Where necessary, you can click a link for more background information.
Income from employment
The higher rates in the first and second tax brackets are increasing the tax burden on income from employment. The first bracket is rising from 35.75% to 36.23% and the second from 37.56% to 38.16%.
The increase in the first and second tax brackets was intended to offset the planned halving of the health insurance excess. While this measure isn’t going ahead, the government has still decided to pursue the planned increase. The maximum working person’s tax credit will rise from €5,685 to €5,929, while the maximum elderly person’s tax credit will fall from €2,067 to €1,993.
Inflation adjustment and freedom contribution
The inflation adjustment is an adjustment to things like tax rates and benefits to compensate for inflation. The aim is to make sure you don’t simply end up paying more tax as a result of price increases. The inflation adjustment is made using what’s known as the ‘table adjustment factor’, a method of calculation laid down by law. However, in 2027, the factor will be applied at a rate of 48% in the first tax bracket. In the second tax bracket, it won’t be applied at all. This means you’ll only receive limited compensation for inflation. This is also known as the ‘freedom contribution’ in income tax, which will be used to fund the increase in defence spending.
Box 3
Tax on actual returns was supposed to be introduced from 2028, meaning you’d pay tax on the actual return on your assets, rather than on an assumed rate. The Senate hasn’t yet given its opinion on the bill. The original idea was that the State Secretary would propose improvements in an amendment on Prinsjesdag and attempt to secure enough support in the Senate.
However, support for changes to Box 3 and its coverage ‘varies widely’ within the government, as shown by the minister's letter that was published on Prinsjesdag in which he wrote to the House of Representatives: ‘as a result, it is not yet possible at this time to reach a proposal for amendment that can count on broad support in Parliament'. The government is therefore postponing further changes to Box 3. New proposals are expected to be included in the 2027 spring budget.
Green investments personal allowance
The personal allowance for green investments in Box 3 will be reduced to €200 (€400 for partners) as of 1 January 2027 and will be completely abolished as of 1 January 2028, just like the tax credit for green investments. This is the result of an amendment to the 2025 Tax Plan, which postponed the effective date by one year to 2028. The reduction to €200 in 2027 is intended as a technical interim step, so that the scheme is effectively no longer relevant to taxpayers.
Mortgage interest deduction
The mortgage interest deduction will remain in place and last year’s relaxation will not be reversed. Last year, the government introduced an extra tax bracket, creating a three-tier tax system. Mortgage interest deduction was linked to the ‘new’ second bracket, which was advantageous for taxpayers because they can claim their deduction at a slightly higher rate. The government wanted to reverse this relaxation of the mortgage interest deduction, but there’s no mention of this in the 2027 Tax Plan.
Cars
In 2027, a 20% additional tax liability will apply to new company electric cars with a list price of up to €30,000. From 2028, the discount on the additional tax liability for electric cars will be abolished.
For the youngtimer scheme, an age limit of 17 years has been proposed for 2027, rather than the previously planned 25 years. From 2028, the age limit will be permanently set at 20 years.
New fossil-fuel lease cars will be more expensive for employers. From 2027, employers who make such cars available for private use will be subject to a pseudo-final levy of 12% on the list price. This could also have implications for a director and major shareholder who drives a fossil-fuel car through their own private limited company.
Parliamentary debate
As the parliamentary debate hasn’t taken place yet, these measures may change. We’re monitoring developments closely and will keep you up to speed on the key changes.