Budget Day 2025: measures for individuals

Increase in box 1 rates

The rates in the first and second brackets of box 1 of the personal income tax (income from work and home) will be increased. For taxpayers younger than the state pension age, the rate in the first bracket (income up to € 38,883, 2025: € 38,441) will be 35.70 per cent (2025: 35.82 per cent). This includes both national insurance contributions (27.65 per cent) and income tax (8.05 per cent). The rate in the second bracket (income between € 38,883 and € 79,137, 2025: 38,441 and € 76,817) will be 37.56 per cent (2025: 37.48 per cent). The rate in the third bracket (income from € 79,137, 2025: € 76,817) will remain at 49.50 per cent.

Limitation of personal income tax indexation

The tax brackets and tax credits within personal income tax will be partially compensated for inflation as of 1 January 2026. The table correction factor will be applied at 57 per cent instead of 100 per cent. The statutory inflation adjustment is 2.9 per cent. Due to the limitation of the inflation compensation, the indexation for pesonal income tax is 1.65 per cent.

Increase in notional return on other assets (box 3)

In box 3 of the personal income tax (income from savings and investments), the notional return for other assets will be increased to 7.78 per cent as of 2026 (2025: 5.88 per cent). Other assets include, for example, shares, second homes and receivables. Separate notional return percentages apply to bank balances and debts. 

Reduction in tax-free allowance (box 3)

From 2026, the tax-free allowance in box 3 will be reduced to € 51,396 per person (in 2025: € 57,684).

Abolition of exemption and tax credit for green investments as of 2028 (box 3)

In box 3, both the exemption and the tax credit for green investments will not be completely abolished until 2028. Both facilities were to be abolished in 2027, but this has been postponed by one year in connection with the introduction of the ‘Actual Return Box 3 Act’ in 2028. In 2026, the exemption for green investments (prior to indexation) will remain at € 26,312 per person (€ 52,624 for partners) and the tax credit for green investments will remain at 0.1 per cent of the exempt amount. In order to do justice to the aim and scope of the intended abolition in 2027, the exemption for green investments will be € 200 per person (€ 400 for partners) as of 1 January 2027. The tax credit will also remain at 0.1 per cent of the exempt amount in 2027.

Adjustments for short-term periods with accrued interest (box 3 rebuttal scheme)

The box 3 rebuttal scheme (taxation based on actual returns) closes the loophole that allows taxation in box 3 to be avoided by purchasing bonds with accrued interest. Two changes are proposed to this effect. Firstly, bonds and similar securities must be valued at their market value. Secondly, the exemption for short-term maturities will be abolished. However, the exemption for short-term terms will continue to apply to bank balances. This means that for interest on short-term bank balances, such as deposits, the main rule will continue to apply that interest will only be counted as actual return when it is received. This is because these bank balances are generally not freely transferable, which means that the risk of tax avoidance is low.  

These measures do not apply to the determination of the fixed return in box 3. These measures will take effect retroactively to 25 August 2025, 16:00 hours. Transitional law applies to assets and liabilities that were already part of the taxpayer's box 3 assets before 16:00 hours on 25 August 2025. This transitional law means that the original rules will continue to apply until the moment of disposal or until the Act on actual return box 3 (scheduled to enter into force on 1 January 2028). 

Increase in effective tax rate for indirect lucrative interests (box 2)

Lucrative interests held through a personal holding company are taxed in box 2 (income from substantial interests) instead of box 1. However, this is subject to the condition that at least 95 per cent of the benefits (dividends) received by the holding company are distributed to the shareholder. The effective rate for income from indirect lucrative interests will be increased to 28.45 per cent (instead of 24.5 per cent) in the first bracket of box 2 or 36 per cent (instead of 31 per cent) in the second bracket of box 2 through the introduction of a multiplier.

Correction of law related to combination of transactions and indirectly held lucrative interests

A measure will be introduced to prevent undesirable structures in the lucrative interest scheme. In short, this concerns a structure in which a combination of transactions makes use of the different bases between box 3 and box 2. These transactions ultimately result in the benefits from lucrative interests not being taxed at all. The accumulated value growth prior to acquiring the substantial interest will be taxed in box 1 instead of box 2.

Exclusion of application of reduced value ratio in case of non-commercial rent

The application of the reduced value ratio (‘leegwaarderatio’) is excluded for box 3 (personal income tax) and gift and inheritance tax in the event of a non-commercial rent agreed between related parties. These properties are taken into account for their full WOZ value. 

Value too high due to reduced value ration regulation

If the value of a rented property (where the tenant enjoys rent protection) is ten per cent or more, higher than the market value of the property when applying the reduced value ration rate, the market value of that property on the WOZ valuation date must be used. The taxpayer must assert this and, if necessary, substantiate it. This concerns the codification of rulings (income tax and gift and inheritance tax) of the Supreme Court in the Decree. This amendment is given retroactive effect to the dates of the Supreme Court judgments (3 April 2015 for personal income tax and 23 September 2016 for gift and inheritance tax). 

Taxation in the event of unequal fractional community or settlement other than in half in marriage contracts

Anything that a spouse is entitled to upon dissolution of a matrimonial community that exceeds half of that community is subject to gift or inheritance tax. The same applies to anything that a spouse is entitled to upon settlement of assets that exceeds half of a sum to be settled on the basis of a final or periodic settlement clause. The measure applies in all cases where an unequal fractional community or settlement other than half has been agreed. Tax is therefore also levied in cases where there are no predominantly tax-related reasons. Spouses who have unequal assets before or during the marriage retain the alternative of keeping (private) assets outside a community or settlement clause in their prenuptual agreement. This measure does not apply to prenuptial agreements in which an unequal fractional community or a settlement clause with unequal fractions was already agreed before 16 September 2025, 16:00 hours. If spouses change their prenuptial agreement after this date in such a way that the share in the matrimonial property or the assets to be settled changes, they will lose their entitlement to transitional law and the new regulations will apply from 1 January 2026. In the case of other changes, transitional law will continue to apply to them.

Broadening the definition of child in gift and inheritance tax

In gift and inheritance tax, non-marital children who do not have a family law relationship with their biological parent(s) are treated in the same way as children who do have a family law relationship with their parent(s). This means that non-marital children are also entitled to the child exemption and the low rate of gift and inheritance tax. For practical reasons, there is no additional requirement for the existence of a close personal relationship involving ‘family life’. However, it is a condition that the non-marital child proves biological parenthood by means of a genetic test (DNA test).  

Changes in the case of gifts made 180 days prior to death

A gift made within 180 days prior to the death of the donor is deemed to have been acquired through passing away and is therefore subject to inheritance tax. However, a gift tax return must also be filed, whereby the gift tax due is offset against the inheritance tax due. This is being simplified. A gift made within 180 days prior to the death of the donor will no longer be regarded as a gift, which means that the obligation to file a gift tax return will also lapse. The change applies to gifts made no more than 180 days prior to 1 January 2026.  

Extension of inheritance tax return filing deadline

From 1 January 2026, the deadline for filing inheritance tax returns will be extended to twenty (instead of eight) months after the date of death. In addition to the extension of the filing deadline, the starting point for calculating tax interest will be adjusted from eight to twenty months after death. This means that no tax interest of 6.5 per cent (2025) will be payable if the return is filed within the extended period, provided that the inheritance tax assessment is determined in accordance with that return.

Adjustment to tax inspection rights

The 2024 Tax Plan includes a tax inspection right, effective 31 December 2025, which allows taxpayers to request access to their tax files held by the Tax and Customs Administration. An implementation analysis shows that this right of access is not feasible in its current form due to a deficiency in ICT facilities at the Tax and Customs Administration. It is therefore proposed to amend the scheme and introduce it in phases via a phased implementation model for each type of tax, starting with personal income tax. Full roll-out for all national taxes is expected in 2032. In contrast to the previously proposed right of access, taxpayers will be given active access to their tax files via the digital portal (Mijn Belastingdienst / Mijn Douane), without the need to submit a request. An exception may be made to the right of access in the case of documents that must remain confidential for important reasons (e.g. if this would also disclose information about other taxpayers). Until 2032, a temporary arrangement will be in place whereby the Tax and Customs Administration can grant limited access to available documents. This temporary arrangement will take effect on 31 December 2025.