2021 payroll and income tax rates

The wage tax and “Box 1” income tax rates for 2021 are as follows:

Tax bracket	Annual wages	Wage tax cum national insurance contributions
		for tax payers under state pension age	for tax payers having reached state pension age
1(a)	€ 0 to € 35,129 inclusive	37.1%	19.2%
1(b)	€ 35,130 to € 68,507 inclusive	37.1%	37.1%
2	€ 68,508 or over	49.5%	49.5%

An elevated second tax bracket maximum of € 35,941 is to apply in 2021 to tax payers born prior to 01 January 1946.

The first tax bracket rate incorporates a national insurance contribution component, which for tax payers under state pension age is made up of a 17.9% state pension charge, a 0.1% surviving dependants’ pension charge and a 9.65% long-term care charge. The obligatory contribution to the state pension coffers ceases to apply when the tax payer in question has reached state pension age, which for 2021 has been set at 66 years and four months.

Tax credits

The general tax credit for 2021 is capped at € 2,837. It is subject to phasedown where the relevant tax payer’s income from work and (owner-occupied) home exceeds € 20,711 p.a. by triggering a 5.977% decrease of the tax payer’s income in excess of € 21,043. The general tax credit for 2021 for those having reached state pension age is capped at € 1,469, with a corresponding phasedown of 3.093%. The general tax credit is reduced further to nil for those with a 2021 income from work and home of € 68,507 and over.

The employed person’s tax credit for 2021 is capped at € 4,205 for those under state pension age, compared with € 2,178 for those having reached state pension age. It too is subject to phasedown where the relevant tax payer’s income from employment exceeds € 35,652 p.a. by triggering a 6% decrease of said tax payer’s income from employment in excess of € 35,652, compared with a 3.105% decrease for those having reached state pension age. The employed person’s tax credit is reduced further to nil for those with a 2021 income from employment of € 105,736 and over.

No basic amount has been set where it concerns the income-related combination tax credit for 2021. Income from employment in excess of € 5,153 will render the tax payer eligible for an 11.45% increase in the tax credit where it concerns the surplus, to an overall maximum of € 2,815.

The young disabled person’s tax credit for 2021 has been set at € 761.

The elderly person’s tax credit for 2021 has been set at € 1,703 for those having reached state pension age whose income is no greater than € 37,970, and is subject to phasedown where the relevant elderly tax payer’s income exceeds € 37,970 p.a. by triggering a 15% decrease of the surplus to a maximum of € 49,323 p.a., which is where the tax credit is reduced further to nil.

The life-course savings scheme tax credit has survived the abolition of the life-course savings scheme itself. It applies to withdrawals made from a tax payer’s life-course savings, in the amount of € 223 for each year of participation in the now defunct scheme.

Dutch version: Tarieven loon- en inkomstenbelasting