New Dutch wage slips: you’ll probably take home more pay next year
According to new calculations by the Ministry of Social Affairs and Employment (SZW), the average employee will take more pay home from their first wage slip in 2019 than they did in December 2018, even without having received a pay rise. The majority of those in employment will receive 1 to 2,5 percent more net pay.
Why are your wages increasing?
Next year, the Dutch government is changing the income tax system and increasing employee tax credit and general tax credit. Because of this, the majority of employees will notice an increase in their net pay. Middle-income earners will profit the most from the tax changes.
It’s not just those in working in the Netherlands that will take home more net pay: people entitled to welfare benefits or a pension will also notice an increase in their bank balance. This is due to the higher 2019 general tax credit and the fact that benefit payments increase in line with inflation.
Some pensioners will lose out
Unfortunately, not everyone will profit from the changes to the tax system. Pensioners with a small supplementary pension of 10.000 euros will receive 0,2 percent less from their retirement fund than they did in December. Thankfully, this only amounts to one to three euros per month.
Whilst some pensioners will lose out on a maximum of three euros per month, all will receive around 30 euros more of state pension (AOW) per month. So, they won’t really be worse off at all.
Higher costs in the Netherlands
Although you might take more pay home, this does not necessarily mean that you will have more disposable income. In 2019, VAT is increasing from six to nine percent, which will result in higher prices. Taxes on energy and health insurance premiums are also rising.
Higher net incomes should compensate for the increasing prices for the majority of households, according to the SZW. They even expect that 96 percent of households will still profit from the increased net pay. On average, purchasing power will also grow by 1,6 percent, calculates the SZW.