The Netherlands scraps plans to increase Box 3 asset tax

The planned increase for the Dutch wealth tax under Box 3 has been scrapped. To make up for the 2,55 billion euros the tax hike would have raised for the treasury, homeowners with low or paid-off mortgages will face higher taxes. 

Box 3 tax hike for 2026 not going ahead

At the end of November, the House of Representatives (Tweede Kamer) scrapped plans introduced by the caretaker government to increase Box 3 taxes, which would have generated 2,55 billion euros over the next two years. 

Box 3 taxes are calculated based on the value of assets, with a fixed rate of return assumed on investments. In 2025, the assumed return on investments and assets was 5,88 percent. The planned hike would have seen this increase to 7,78 percent in 2026.  

However, due to concerns that the rising Box 3 taxes were part of the reason behind more rental properties being sold off by landlords, the Dutch government decided to halt the tax hike for next year. To offset the scrapped plans, the tax deduction for homeowners with low or paid-off mortgages will be phased out sooner.

Dutch homeowners face higher taxes with phasing out of incentives

Anyone who owns their own home in the Netherlands has a portion of its value added to their Box 1 income, known as deemed rental value (eigenwoningforfait or EWF). However, mortgage interest deductions often offset EWF tax for residents with mortgages, which means homeowners often do not have to pay the tax.

Since 2023, the government has been slowly phasing out this deduction, aiming to eradicate the incentive by 2048. The recent decision to scrap the Box 3 tax hike now means that the EWF tax exemption will be phased out sooner, by 2041. This is expected to bring in more than 2,8 billion euros, according to De Telegraaf.

In 2026, the deduction will be reduced from 76,67 percent to 71,8 percent. This means that someone who has finished paying off their mortgage on a home with a WOZ value of 500.000 euros, will have an additional tax liability of 1.750 euros, 71,8 percent of which is tax deductible, leaving 493 euros on which income tax will be charged. 

"For many homeowners, the coming years won't involve large sums. Think a few tens of euros," Onno Adriaansens, partner at Baker Tilly explains to De Telegraaf. "But that will increase as the phase-out progresses." Despite this, Adriaansens understands the measure. "The tax increase in Box 3 would have caused enormous unrest and would have been much more disruptive to society than this measure."