Tax Topics
Dutch Income Tax & Social Contributions (Box 1)
Box 1 income tax combines your salary, benefits, and home-related income into one comprehensive tax calculation. Understanding this system is crucial as it typically represents 35-50% of your gross income.
- Progressive tax rates: 36.93% up to €75,624, then 49.50%
- Includes social insurance (AOW pension, WLZ care, ANW survivors)
- Covers employment income, benefits, and home-related income
- Tax credits can significantly reduce your final burden
- Mortgage interest deduction available for homeowners
From €65,000 gross: €24,004 initial tax, minus €3,362 general credit and €5,052 labor credit = €15,590 net tax burden.
What's the difference between Box 1, Box 2, and Box 3?
Box 1 covers income from work and home (salary, benefits, rental income). Box 2 covers substantial business interests (shares >5%). Box 3 covers savings and investments with deemed income taxation.
Why are social contributions included in income tax?
The Netherlands combines income tax and social insurance contributions for efficiency. This integrated system ensures everyone contributes to essential social benefits like pensions and healthcare.
How does the mortgage interest deduction work?
You can deduct mortgage interest on your primary residence up to €1,000,000. The deduction rate equals your marginal tax rate (36.93% or 49.50%). The deduction gradually decreases by 3% annually.