Dutch government to increase tax-free travel allowance in 2023 and 2024

After facing rising pressure from parliament and the public to tackle the Netherlands’ cost of living crisis, the Dutch government has decided to increase the tax-free travel allowance (reiskostenvergoeding) for employees who drive to their jobs. 

Tax-free travel allowance to rise to 23 cents from 2024

With the war in Ukraine driving up energy and fuel prices across the continent, Prime Minister Mark Rutte and his cabinet have announced various measures in order to alleviate the strain placed on businesses and families in the Netherlands. Not only will municipalities be distributing an energy subsidy amongst households, but the tax rates on petrol and energy have also been lowered. 

Now, as part of negotiations over the government’s Spring Memorandum (voorjaarsnota), NOS reports that the cabinet is setting aside 200 million euros per year in 2023 and 2024 for the new travel allowance. Instead of the current 19 cents per kilometre, in 2023 workers will likely be able to deduct up to 21 cents per kilometre of travel. In 2024, this is expected to rise to 23 cents.

Purchasing power in the Netherlands continues to fall

This marks the first time since 2006 that the government has moved to increase the tax-free allowance. The change was only set to be introduced in 2024, but the rising inflation rate and falling purchasing power in the Netherlands have pushed the government to act sooner. 

Companies are free to offer higher compensation rates to their employees, but any money offered over the national rate will be subject to tax. The final details about the changes to the allowance will be announced on Prinsjesdag in the autumn.