Last updated: 24 September 2026. Based on the 2027 Tax Plan presented on Prinsjesdag 2026, which parliament still has to approve.
Dutch taxes have a reputation for being high, and they are. But the system is also well organised, mostly digital, and for most employees surprisingly simple once you understand the basics. Your employer takes tax off your salary every month, and the yearly tax return is often just a check, and sometimes a refund.
This guide explains Dutch income tax for expats in plain English: the three boxes, the 2027 tax rates, tax credits, the 30% ruling, when to file, and what to watch out for in your first year.
Short answer: In 2027, the proposed Dutch income tax rates on work income are 36.23% up to €39,247, 38.16% up to €78,426 and 49.5% above that, for people below state pension age. Tax credits lower the amount you actually pay. Your employer withholds wage tax every month, and you file a tax return every spring, before 1 May. In your year of arrival you file a special M form. If you were recruited from abroad, check whether you qualify for the 30% ruling.
Jump to: The three boxes | 2027 rates | Tax credits | Your payslip | The tax return | 30% ruling | Benefits | Tax in South Africa | FAQ
The three boxes
Dutch income tax splits your income into three boxes, each with its own rules and rates.
| Box | What it covers | How it is taxed |
|---|---|---|
| Box 1 | Income from work and your own home: salary, freelance income, pensions, benefits, and your mortgage interest deduction | Progressive rates, from about 36% to 49.5% |
| Box 2 | Income from a substantial interest: owning 5% or more of a company | Separate flat rates |
| Box 3 | Savings and investments | A tax on a deemed return on your assets above a tax free allowance |
For most employees, only box 1 matters, plus box 3 if you have significant savings or investments.
Box 3 is changing
Box 3 has been the subject of court cases because it taxed people on a fictional return that was often higher than what they actually earned. A new system that taxes actual returns was approved by the Tweede Kamer in February 2026 and is planned to start in 2028, but it still has to pass the Eerste Kamer (Senate). If you have savings or investments, keep an eye on this.
Box 1 tax rates for 2027
These are the proposed rates for people below state pension (AOW) age, including national insurance contributions, as presented in the 2027 Tax Plan.
| Taxable income 2027 | Rate |
|---|---|
| Up to €39,247 | 36.23% |
| €39,247 to €78,426 | 38.16% |
| Above €78,426 | 49.5% |
The brackets are not fully adjusted for inflation in 2027, so more people move into a higher bracket sooner. For the full list of 2027 changes, see our post on what changes for expats in 2027.
Tax credits: why you pay less than the rates suggest
Tax credits (heffingskortingen) are deducted from the tax you owe, and for low and middle incomes they make a big difference. The two most important ones are:
| Tax credit 2027 (maximum, below AOW age) | Amount |
|---|---|
| General tax credit (algemene heffingskorting) | €3,154 |
| Labour tax credit (arbeidskorting) | €5,929 |
| Income dependent combination credit (for working parents with young children) | €2,918 |
Both the general and the labour tax credit shrink as your income rises, and at high incomes the general tax credit disappears completely. Your employer applies the credits through your monthly wage tax, so you usually already benefit without doing anything. If you have two jobs, only apply the credits at one employer, or you will have to pay back tax later.
Reading your Dutch payslip
- Bruto (gross): your salary before tax.
- Loonheffing (wage tax): income tax and national insurance, withheld every month.
- Pensioenpremie: your contribution to the company pension scheme, if there is one.
- Netto (net): what lands in your bank account.
- Vakantiegeld: the 8% holiday allowance you build up, usually paid in May or June, and taxed at a special rate that often makes it look heavily taxed.
Filing your tax return
The Dutch tax year is the calendar year. You file your tax return (aangifte inkomstenbelasting) online with your DigiD between 1 March and 1 May of the following year. Most of the information, like your salary and bank balances, is pre filled, so for many employees it only takes an hour. You can ask for an extension if you need more time.
- Year of arrival or departure: you file an M form (M-formulier) instead of the normal return. It is more complicated, because it covers the part of the year you lived abroad too, so many expats use a tax adviser for this one.
- Do you have to file? If you receive a letter or a notice in your Mijn Belastingdienst account, you must file. Even if not, it is often worth filing to claim a refund, for example for mortgage interest or if you changed jobs.
- Provisional assessment: if you own a home with a mortgage, you can ask for a provisional assessment (voorlopige aanslag) so you get your mortgage interest deduction every month.
- DigiD: you need a DigiD to do almost anything with the tax office. Apply for one as soon as you have your BSN.
The 30% ruling
If you were recruited from abroad and meet the salary requirement, your employer can pay up to 30% of your salary tax free for five years, as a fixed allowance for the extra costs of living abroad. From 2027 this drops to 27% for most people, and the minimum salary to qualify goes up. Read the 30% ruling becomes 27% in 2027 for the details. You need to apply together with your employer, and the timing matters, so bring it up when you negotiate your contract.
Benefits and allowances
Depending on your income and situation, you might qualify for benefits (toeslagen) from the Dienst Toeslagen, such as healthcare allowance (zorgtoeslag), rent allowance (huurtoeslag) and childcare allowance (kinderopvangtoeslag). Child benefit (kinderbijslag) comes from the SVB. Be careful with toeslagen: they are advances based on your estimated income, and if you earn more than expected, you have to pay them back. Also check how they affect your residence permit before applying.
What about tax in South Africa?
If you are moving from South Africa, you usually need to tell SARS that you have stopped being a tax resident, sometimes called ceasing tax residency or, in the old days, financial emigration. The Netherlands and South Africa have a tax treaty to prevent double taxation, but pensions, retirement annuities, rental income from property back home and investments can all be taxed differently. This is one area where paying for advice from someone who knows both systems is money well spent.
Frequently asked questions
What are the Dutch income tax rates for 2027?
For people below state pension age, the proposed 2027 box 1 rates are 36.23% up to €39,247, 38.16% up to €78,426, and 49.5% above that.
When is the Dutch tax return deadline?
You file your return for the previous year between 1 March and 1 May. You can ask for an extension.
What is the M form?
The M form (M-formulier) is the tax return for the year you moved to or from the Netherlands. It covers both the part of the year you lived here and abroad.
Do expats pay less tax in the Netherlands?
Expats who qualify for the 30% ruling receive part of their salary tax free for up to five years. From 2027 the maximum drops to 27% for most people.
What is vakantiegeld and is it taxed?
Vakantiegeld is your 8% holiday allowance. It is taxed like normal income, but because it is paid as a lump sum, the tax withheld often looks high.
Planning your move? See our guides to finding a job in the Netherlands and the highly skilled migrant visa.
We are not tax advisers. This is general information based on the proposed 2027 Tax Plan, which can still change. Check the Belastingdienst website or speak to a tax adviser for your own situation.
Sources: FiscAlert: box 1 tax rates 2027, Eerste Kamer: box 3 actual return bill, Belastingdienst.
