Law changes for 2018 so far: Work and Income
With the new year starting, the Dutch government is implementing a number of new laws and changing some existing ones. Below is an explanation of changes to the law applying to work and income.
On January 1st, the legal minimum wage is increasing. In 2018 the minimum wage for people 22 years old or older, who work a full work week, is 364.15 euros per week. For people 21 years old or younger, the minimum wage is lower, ranging from 109.25 euros per week for 15-year-olds to 309.55 euros per week for 21-year-olds. Information on the minimum wage amounts per age can be found here.
From January employers can also receive an allowance for hiring young people between the ages of 18 and 21 years. This is to compensate for minimum wage for young people increasing in July of this year. The Tax Authority will pay this allowance automatically at the end of the year.
Severance pay, or transition allowance, will be 79 thousand euros, or one gross annual salary if that is higher than 79 thousand euros, in 2018. This year it was 77 thousand euros.
Next year employers lose their premium reductions for employing younger, elderly and disabled workers. This is being replaced with labor costs benefits. The labor costs benefits are lower per employee than the premium reductions were, but more employers can make use of it. It also benefits smaller businesses, who can get the full labor cost benefits. Whereas they only got part of the premium reductions, because they paid less on employee insurance premiums than the maximum premium reductions. More information about the amounts involved and how they changed, can be found here.
Retirement age in the Netherlands increases to 66 years old on January 1st. A year ago, those of age 65 and 9 months qualified for social security.
The maximum amount of assets, such as savings, you are allowed to have and still qualify for a social assistance benefit, is increasing next year. Next year couples and single parents with 12,040 euros in assets can still qualify for a benefit. For single people, the maximum amount is 6,020 euros.
The work bonus expires next year.
Income tax rates are changing slightly next year. For people in the 2nd and 3rd tax brackets, the income tax rate is 40.85 percent from January 1st, compared to 40.8 percent in 2017. The income tax rate for the 4th bracket will be 51.95 percent in 2018, compared to 52 percent in 2017.
The amounts involved in the general tax credit - a credit you get if you live in the Netherlands and pay wage tax or income tax - are also changing next year. This credit depends on the level of income. People with an income of 20,142 euros or lower will see an increase in their general tax credit in 2018. Everyone with a higher income will see their tax credit decrease. The maximum credit in 2018 is 2,265 euros, compared to 2,254 euros in 2017.
The employment tax credit - a tax credit you get if you have paid work - is increasing in 2018. The maximum employment tax credit is 3,249 euros in 2018, compared to 3,223 euros in 2017. From an income of 33,112 euros, the tax credit decreases.
Elderly tax credit is increasing by 115 euros to 1,418 euros in 2018. Persons who reached retirement age can apply for this tax credit when filing their tax return.
The income-related combination tax credit is increasing to 1,052 euros in 2018, compared to 1,043 euros in 2017.
Savers and investors will pay less tax in 2018. The tax-free asset amount increases from 25 thousand euros in 2017 to 30 thousand euros in 2018.
From 2018, foster children and the parents who care for them are no longer obliged to be in a tax partnership. They can ask the tax authorities to change their tax partnership from January 1st. This means that the Tax Authority will no longer add the income of an 18-year-old foster child and parent together when determining income tax.
The benefit for young people with an illness or disability (Wajong) who can still do some work is increasing to 70 percent of the statutory minimum wage as of January 1st, 2018