Tax change: Babies born on 1 January 2025 will cost parents €30,000 more than day before

Netherlands residents planning on becoming parents in the coming two years or so should aim to have their child by 31 December 2024. Because due to a tax change, people who have their first child on 1 January 2025 or later will no longer have access to a tax benefit that amounts to around 30,000 euros spread over twelve years, AD reports.

This is the result of the abolition of the income-related combination tax credit (IACK), aimed at making it financially attractive for new parents to keep working. But because the government is making childcare almost free, the IACK becomes superfluous, according to the government. The coalition, therefore, put the IACK’s abolition in the coalition agreement.

The transition is very abrupt, however. The regulation disappears for new births the moment the clock ticks into 1 January 2025. So first-time parents whose baby is born on 31 December 2024 will have access to this benefit, while first-time parents of babies born a day later won’t.

Parliamentarians aren’t happy about this. “We can expect people aiming for pre-term births. Let there be no misunderstanding about that. That’s what happens with these kinds of tax incentives. That’s asking for trouble, isn’t it?” MP Pieter Omtzigt said to AD.

But the government doesn’t plan to change things, according to the newspaper. Phasing out the tax credit could be a solution, but that would cost money. The abolition of the IACK saves the government 1.7 billion euros per year. “I’m not going to make it prettier than it is. In short: as Cabinet, we stick to the coalition agreement,” said State Secretary Marnix van Rij of Taxes.