How Gross to Net Works in the Netherlands
A complete guide to understanding Dutch income tax, tax brackets, tax credits, and how your net salary is calculated.
Table of Contents
Introduction to Dutch Income Tax
Understanding how your gross salary converts to net income in the Netherlands is essential for financial planning. The Dutch tax system uses a progressive tax rate, meaning higher incomes are taxed at higher percentages.
Your gross salary goes through several deductions before you receive your net pay: income tax, social contributions, and health insurance premiums. However, you also benefit from tax credits that reduce your overall tax burden.
This guide explains each component of the Dutch income tax system, helping you understand exactly what happens to your salary and how to optimize your take-home pay.
Tax Brackets (Belastingschijven) 2025
The Netherlands uses three tax brackets. The first bracket rate includes both income tax and mandatory social contributions. The second bracket applies to mid-range income. The top bracket applies to higher earners.
Important: You only pay each rate on the income within that bracket. This is why your effective tax rate is always lower than your top bracket rate.
| Bracket | Income | Rate |
|---|---|---|
| 1 | €0 - €38,441 | 35.82% |
| 2 | €38,441 - €76,817 | 37.48% |
| 3 | Above €76,817 | 49.50% |
* Bracket 1 rate includes both income tax and social contributions (AOW, ANW, WLZ)
Tax Credits (Heffingskortingen)
Tax credits directly reduce the amount of tax you owe. The two main credits most employees receive are the algemene heffingskorting (general tax credit) and arbeidskorting (employment tax credit).
The general tax credit is available to everyone, while the employment tax credit is specifically for people who earn income from work. Both credits phase out at higher incomes, meaning you receive less credit as your income increases.
Together, these credits can significantly reduce your tax bill - a substantial benefit that increases your take-home pay.
General Tax Credit
Maximum in 2025. Phases out for income above €28,406.
Employment Tax Credit
Maximum in 2025. For employed individuals only, phases out at higher incomes.
Calculation Examples
Let's see how this works in practice with some common salary examples. Click on any example below to see the full breakdown for that salary.
Each example page shows you the exact tax calculation, which brackets your income falls into, and how much you take home after all deductions and credits.
Social Contributions (Volksverzekeringen)
Part of the first bracket rate (27.65%) consists of mandatory social contributions. These fund the Dutch social security system including state pensions (AOW), survivor benefits (ANW), and long-term care (WLZ).
Unlike income tax, social contributions are only charged on income up to a threshold. This is why the rate changes between brackets - you're no longer paying social contributions, just income tax.