Heffingskortingen

Heffingskortingen are Dutch tax credits that directly reduce your calculated income tax and national insurance contributions liability. Unlike deductions (which reduce taxable income), tax credits reduce the final tax bill euro-for-euro. The two main tax credits are the algemene heffingskorting (general tax credit) and arbeidskorting (employment tax credit).

For 2026, the general tax credit (algemene heffingskorting) is up to €3,362 annually, available to all Dutch tax residents but phases out for higher incomes. The employment tax credit (arbeidskorting) is up to €5,052 for workers, phasing out above approximately €39,898 in income. Together, these credits can reduce your annual tax liability by up to €8,414. Tax credits consist of a contribution component (reducing national insurance) and a tax component (reducing income tax). The credits are automatically applied when you file your tax return.

Real-World Example If Bas earns €40,000 in 2026, his initial tax calculation is approximately €14,300 before credits. After applying the general tax credit (€3,362) and employment tax credit (approximately €5,000), his tax credits total €8,362. His final tax liability drops to approximately €5,938, an effective tax rate of ~14.8% instead of ~35.75% without credits.