Imminent changes to Dutch taxes and childcare costs in the Netherlands mean that anyone who gives birth before the end of 2024 should be around 30.000 euros better off than someone who has a baby after January 1, 2025.
Giving birth before 2025 could save new parents thousands in taxes
Current tax law means parents with jobs benefit from a taxation benefit known as IACK. The discount on income tax is designed to encourage parents to continue to work even after having children, and over a period of 12 years allows a couple to “save” around 30.000 euros.
However, the Dutch government has recently confirmed that the cost of childcare services in the Netherlands will drop sharply, becoming practically free for many parents. In the government’s view, this renders the IACK benefit redundant, as parents will be able to continue to work without forking over thousands of euros every year for childcare.
These changes mean that new parents will only be able to benefit from the tax reduction if they have a baby before January 1, 2025. There’s no transition period, meaning that giving birth just a few hours later will have a significant impact on tax rates for parents.
Dutch parliament says changes are unfair to future parents
Members in the House of Representatives (Tweede Kamer) have raised concerns about how unfair these changes will be for future parents, who may now opt to plan pregnancies for before the end of 2024, which could in turn lead to a baby boom. “We can expect that preterm births will be controlled,” says parliament member Pieter Omtzigt. “That's what happens with these kinds of tax incentives. That's asking for trouble, isn't it?”
Labour Party (PvdA) member Henk Nijboer has also voiced his concerns: “This creates huge differences between parents. It does not make any sense at all," he told Het Parool.
The cabinet, however, has made it clear that the plans to scrap IACK - which should save the government 1,7 billion euros a year - will be going ahead as stated in the coalition agreement. They emphasise that the loss of IACK will be compensated for with new rates for various allowances and benefits.