New income tax rates

With adjustments to income tax rates in brackets 1,2 and 3 as of 1 January 2025, the new government aims to ensure people with a middle income have more to spend in the coming year. The changes to income tax rates will also be beneficial for people with low incomes. 

The government proposes the following changes:

• The rate in bracket 1 will be reduced to 35.82%. Down from 36.97% in 2024.
• The rate in bracket 2 will increase slightly from 36.97% in 2024 to 37.48% in 2025.
• The rate in bracket 3 remains at 49.50%.

Reduction of general tax credit (AHK)

In the budget for 2025, it has been proposed that the AHK threshold will be reduced by €335. This will mean a larger part of your income and premiums will be taxed. The amount of (AHK) tax credit you receive will still depend on the level of your income. The higher your income, the lower the tax credit. Do you have a minimum income? Then the maximum AHK applies.

Does your household fall below the social minimum due to the current or new regulations and schemes? Households that fall below the social minimum and have a single income will receive the AHK tax credit from 2028. Until then, municipalities have a temporary scheme, whereby a small group of households below the social assistance standard will receive compensation.

Increase in VAT rates

During Budget Day, the measures from the outline agreement, to increase the tax rate on leisure, culture, books and sports, was reiterated: the VAT rate for culture, books, sports and overnight stays will increase from 9% to 21% by 2026. Bookings made in 2025 for activities in 2026 will also be subject to the higher rate. In addition, an increase in the rate of gambling tax has been budgeted for the next two years. From 1 January 2025, it will gradually increase from 30.5% to 34.2%, to 37.8% by 2026.

Changes in transport

Several tax changes related to cars and transport have been included in the tax plans presented on Budget Day. As a director, you may have to deal with this:

1. MRB (road tax)
   The government wants to give emission-free passenger cars (both new and second-hand) a 25% discount on road tax until 2029. This discount should compensate for the extra weight of the battery, as the amount of road tax depends on the weight of your car. The discount scheme will expire in 2030.
2. Bpm (private vehicle and motorcycle tax)

Are you planning to buy or sell a plug-in hybrid car in 2025? The government plans to abolish the separate Bpm rate for these vehicles. The price per gram on CO2 emissions will then be the same as for other passenger cars.

3. Excise duty (petrol, diesel and LPG)

The government plans to continue the current excise duty reduction on petrol, diesel and LPG in 2025. Inflation correction measures will not be applied. For example, the excise duty rate will remain the same as in 2024: Petrol € 0.79, Diesel € 0.52, LPG € 0.19) per litre.

4. Deductions for transport in case of illness/disability

As of 2025, the deduction of transport costs in the event of illness or disability on your tax return will be simplified in two ways:

1. By introducing a fixed deduction fee of €0.23 cents per kilometre.
2. Including a standard deduction of €925 for people who have additional transport costs due to an illness or disability, and cannot walk more than 100 metres unaided.    

Energy taxation

The much-discussed net metering scheme, which allows owners of solar panels to compensate their energy yield with the purchase of energy, will be abolished as of 2027. A feed-in fee is then set and the aim is to reduce the burden on the energy network by encouraging the use of self-generated energy. In addition, the proposed 2.3% increase in energy tax on natural gas will not go ahead. Instead, the government proposes to reduce the tax as of 2025, making the tax 2.8 cents per m3  lower than without this measure (up to a maximum of 170,000 m3).

Housing: transfer tax 2nd home

The government plans to reduce the transfer tax rate for a second home from 10.4% to 8% in 2026. This should make the purchase and sale of a second home (for rental) more attractive from a tax standpoint.

Want to know more?

In November and December, the House of Representatives and the Senate will vote on the proposals mentioned above. At the end of the year, the final Tax Plan for 2025 will be announced. Of course, moneywood will keep you informed. Would you like to learn more about the upcoming tax measures? On this page you will find the 2025 Tax Plan (in Dutch) and all related documents. Are you an entrepreneur and are you wondering how the tax changes my effect you and your business? You can find out more here (in Dutch).

Below you will find a fact sheet (in Dutch) from the Dutch government, with calculation examples that allow you to see, how your finances could be effected if the tax changes are implemented.