On top of income tax deductions and allowances, there are several tax credits in the Netherlands that expats could be eligible for. Tax credits enable you to reduce your taxable income and national insurance contributions, meaning you pay less tax overall. Tax credits are usually applied automatically by your employer or the benefits agency, if you receive benefits.
The general tax credit is a reduction on your income tax and national insurance premiums. Everyone living in the Netherlands is entitled to the general tax credit, although if you have a high income you may not receive much of a credit: the more you earn, the lower your general tax credit is.
The amount you are entitled to depends on your income level. In 2025, the credit amounts for people who have not yet reached retirement age are:
| Taxable income | General tax credit |
|---|---|
| Up to €28.406 | €3.068 |
| €28.406 - €76.817 | €3.068 - 6,337% x (taxable income - €28.406) |
| €76.817+ | €0 |
The tax credit is calculated and credited to your tax balance on your salary by your employer, so it is not necessary to do anything to receive it. If you are self-employed in the Netherlands, you apply for the general tax credit via your tax return.
People who are retired are eligible for a reduced general tax credit, ranging from €1.536 down to €0 as income increases.
If you file your taxes jointly with a partner, then from 2023 you may no longer receive a general tax credit if you have little to no income and you were born after 1963.
Every working person in the Netherlands is entitled to receive the labour tax credit (arbeidskorting or loonheffingskorting). Like the general tax credit, the labour tax credit is calculated by your employer and applied to your salary, so you receive it automatically. If you work for yourself then the tax credits are calculated when you complete your annual tax return.
The amount of your labour tax credit depends on how much you earn. In 2025, labour tax credit is calculated as follows for people who have not yet reached retirement age:
| Income | Labour tax credit |
|---|---|
| Up to €12.169 | 8,052% x income |
| €12.169 - €26.288 | €980 + 30,030% x (income - €12.169) |
| €26.288 - €43.071 | €5.220 + 2,258% x (income - €26.288) |
| €43.071 - €129.078 | €5.599 - 6,510% x (income - €43.071) |
| €129.078+ | €0 |
Retired people receive about half as much labour tax credit as an employed person.
If you are a working parent with young children, you may also qualify for the income-related combination tax credit (IACK), which reduces your tax and national insurance burden. The credit is designed to encourage parents with children to take up paid work.
To qualify for the IACK, you must fulfil the following criteria:
The income-related combination tax credit is calculated based on your income, as follows:
| Employment income | IACK amount |
|---|---|
| Up to €6.145 euros | €0 |
| €6.145 - €32.223 | 11,45% x (income from work - €6.145) |
| €32.223+ | €2.986 |
Note that as of 2023 the Dutch government has plans to scrap the IACK tax credit as it increases funding for childcare. Currently, the credit is due to be phased out from 2027 and scrapped completely from January 1, 2035.