More than two-dozen tax changes will affect Dutch household wallets next year

The caretaker Cabinet revealed on Tuesday a series of taxes and benefits that it hopes to adjust in the coming year. The lowest income tax rate fall slightly, but the second bracket will be higher, and the tax brackets will not adjust in line with inflation, meaning lower- and middle-income households will be less likely to feel the full benefits of any increase in purchasing power. If the plan passes Parliament without modification, those with savings and assets subject to tax will also feel more pain when filing their annual returns, but more households with lower incomes will be eligible for rental housing assistance.

A list of those proposals which will hit the wallets of residents in the Netherlands is outlined below. It includes a controversial measure to introduce a variable rate for flight taxes paid per passenger based on the length of the flight. Current and prospective landlords will see a reduction in property transfer tax rates. Health insurance costs are expected to rise to 159 euros per month, but parents will see nearly all of their childcare costs covered by subsidies.

The plans are part of the Cabinet's proposal for the 2026 annual budget, which was released on Prinsjesdag. The date is organized every year on the third Tuesday of September, with events like a traditional parade, the reigning monarch's speech from the throne, and the finance minister's address to Parliament. Getting the tax plan passed by legislators will be an unusually uphill battle, as the current caretaker Cabinet does not hold a majority of support in either of the two Houses of Parliament.

Work and Income Tax and Subsidy Plans for 2026

• The rate of tax paid on the first chunk of income earned in a year will fall from 35.82 percent to 35.70 percent. This will cover the first 38,883 euros in earnings, about 1 percent higher than the most recent tax year. With inflation just under 3 percent, households will likely feel more of a sting than last year.
• The next block of income will be hit with a higher 37.56 percent tax rate, up from 37.48 percent, which will be assessed on income above the first bracket and up to 79,137 euros. That is more closely matched to inflation. All income above that threshold will be taxed at 49.50 percent, the same rate as previously paid.
• More households will also be forced to pay tax on savings and assets in Box 3 of their income tax filings under the Cabinet's plan. Individuals with more than 51,396 euros in assets will have to pay tax on the overage, a significant drop in the tax-free allowance of almost 6,300 euros.
• Fictive gains on investments will be assumed to be much higher in Box 3, as well. The Cabinet wants this rate to rise from 5.88 percent to 7.78 percent to determine taxable gains, though taxpayers will be able to challenge this assessment.
• The reduction in a key tax benefit for self-employed people will also be slashed further, in line with the accelerated plan that rolled out a few years ago. Currently, those individuals can keep 2,470 euros of their income tax-free, but this will fall to 1,200 euros next year. That is down over 5,000 euros compared to 2022.
• Foreign employees who temporarily relocate to the Netherlands will see a reduced benefit under the ET scheme from January, if the Cabinet's proposal is approved. They will no longer be allowed to lower their tax burden to offset the costs of utilities, and personal calls to people in their home countries.
• Private equity managers will soon pay a 36 percent tax rate on their Box 2 income for money and assets which they accrue in the course of their work.
• The government is delaying cuts to unemployment benefits. The benefits are currently paid out over 18 months, but that will still fall to 12 months. The measure will now take effect in 2028 instead of 2027.
• Income earned from trading currencies could be taxed at a new rate and in a new manner from 2027.

Healthcare, Childcare, and Household Tax and Subsidy Plans for 2026

• Health insurance costs will likely rise by about 3 euros per month, on average. The increase will bring premiums to 159 euros when paid monthly, or 1,908 euros on an annual basis, per adult.
• Working parents will be eligible for a greater subsidy to cover substantially more of their childcare costs. Currently, the subsidy covers a percentage of the maximum hourly rate parents are charged, which is variable based on household income. These hourly rates are 10.71 euros for a daycare center, 9.52 euros for afterschool care, and 8.10 euros for children who are supervised in a more informal setting.
• The Cabinet wants to boost the childcare subsidy to cover 96 percent of the maximum hourly rate regardless of household income. Previous criticism of such plans have stated this disproportionately benefits wealthier households that may not need the support. Parents will still be responsible for the remainder and all of the costs above the maximum rates, which will rise by 4.84 percent next year.
• Up to 6,000 euros will be made available per year to low-income households with rent above 900.07 euros, with no upper limit to the monthly rent. This will mark an expansion of existing subsidies available to a wider group of people.
• Households could pay about a reduced energy tax, amounting to savings of about 640 euros
• In addition to over 174 million euros allocated by the European Union, the Cabinet has earmarked 60 million euros for programs to help low-income households contend with higher energy costs. Such households in the Caribbean Netherlands will be able to claim up to 1,300 U.S. dollars, currently about 1,100 euros.
• Inheritance tax and gift tax adjustments will lead to spouses paying tax on half of their community property when a marriage ends in death or divorce, even if the assets are divided unequally on paper.
• Inheritance tax filing deadlines will extend from the current 8 months to 20 months to give surviving relatives more time to get their affairs in order.
• Taxes on homes inherited from a deceased person will be applied to the actual value of a home, instead of the WOZ official valuation. The measure is expected to sharply increase the amount of money collected by authorities.

Airport Taxes, Fuel Excise Taxes, and Consumer Tax and Subsidy Plans for 2026

• Many airline passengers can expect to pay significantly higher taxes when departing from Dutch airports. The current rate of 29.40 euros would only apply to short-haul flights, with the airport tax on slightly longer flights to destinations in Egypt and Turkey rising to 47.24 euros. Long-haul international flights would be hit with a tax of 70.86 euros. This includes destinations in the U.S., Mexico, South Africa, and Asia, among others. The plan would take effect in 2027, but would not affect flights to the Caribbean Netherlands.
• Sugar taxes of 26 cents per liter of soft drinks will soon apply to beverages with just a drop of dairy added to them, a loophole exploited by manufacturers to dodge the tax. Only water, milk, buttermilk, and certain soy-based alternatives will be exempt from the tax.
• Taxes on petrol and diesel will remain unaffected in 2026, with the excise tax on petrol capped at 79 cents per liter, and 52 cents per liter of diesel. The excise tax on liquified petroleum gas, or LPG, will also remain at 19 cents per liter.
• Motor vehicle taxes will be 30 percent lower for zero-emission vehicles, instead of the current reduction of 25 percent. This reduction will also apply to zero-emission motorcycles and certain other passenger vehicles.
• The owners of cars which are older than 40 years will also have to pay road tax from next year, losing the exemption previously afforded them.

Entrepreneurship and Investment Tax and Subsidy Plans for 2026

• Those with the capital to invest in the housing market will see transfer tax on an additional home fall from 10.4 percent down to 8 percent. The move is meant to bring landlords back to the market after the rental housing sell-off triggered by previous national policies that dented investor profits.
• Employers will pay 0.08 percent more in AOF premiums to cover employer contributions for disability benefits.
• Businesses will pay tax on more of the potable water they use, which is currently capped at the first 300 cubic meters. This will rise to 50,000 cubic meters next year, and the tax will apply to all drinking water used from 2027.
• Small businesses and mid-sized enterprises with fewer than 250 employees will not have to submit the mandatory statements regarding personal vehicle usage. The current threshold is 100 employees.
• Businesses can expect to pay a higher cost when providing company cars to employees which are not zero-emission vehicles.

The proposed tax changes will only be debated in the Tweede Kamer, the lower house of Parliament, after the election at the end of October. The Eerste Kamer, the country's Senate, will take up the issue in December. Both houses need to pass the legislation before it can be enacted.

But the caretaker Cabinet lost its ability to command a majority after the PVV and the NSC dropped out of the four-party coalition, leaving only the VVD and BBB in power. Prime Minister Dick Schoof, who is not affiliated with a political party, is still running the minority government. The four-party right-wing coalition of the PVV, VVD, NSC and BBB formed in July 2024 after a tumultuous period of negotiation following the November 2023 Tweede Kamer election.

It collapsed less than a year later when the PVV pulled out when the coalition partners wanted to stick to earlier agreements on tougher restrictions to asylum and immigration, despite sudden now-or-never demands from PVV leader Geert Wilders to push a package of measures into force using emergency powers instead of holding debate and a vote in Parliament.

He pulled the PVV out of the coalition deal, even though his own party was in charge of asylum and immigration policy for the Cabinet. Later, the NSC dropped out over its handling of issues related to the ongoing conflict between Israel and the Palestinian Territories.