(Wealthy) individuals

2024 Income tax rates for taxpayers below statutory retirement age

Taxpayers who have not reached the statutory retirement age (AOW) at the beginning of 2024, are expecting the following tax brackets to be applied in 2024.

These percentages include national social insurance contributions. A different rate structure applies for those who qualify for fewer or no national insurance contributions.

2024 Income tax rates for old-age pensioners

Taxpayers who have reached the statutory retirement age (AOW) at the beginning of 2024 and were born after 1946, are expected to have the following tax brackets applied in 2024.

* Born before 1946: tax bracket 1 up to € 40,077

* Born before 1946: tax bracket 1 up to € 38,703

These percentages include national social insurance contributions. A different rate structure applies for those who qualify for other national insurance contributions.

Changed tax credits

Below are the changes in tax credits as mentioned in the Explanatory Memorandum of the 2024 Tax Plan. These relate to taxpayers who are below the statutory retirement age (AOW). For people older than the statutory retirement age, lower limits apply.

Increase in rate of box 3 to 34%

The government proposes to raise the rate in box 3 by two percentage points to 34%. In 2025 the rate in box 3 will remain unchanged. In addition, the government proposes not to index the tax-free assets in box 3 as of 1 January 2024, which means that in 2024 the tax-free assets will stay at € 57,000 per person (€ 114,000 for tax partners).

• Take note! A new box 3 system has been postponed to 2027.
• Tip! If the actual yield on savings and investments is lower than the flat rate yield, lodge an objection against the tax assessment.

Homeowner's Association share and clients' funds account

On 1 January 2023, a temporary box 3 levy scheme entered into force with the aim of bringing flat rate yields closer to actual yields. Assets can fall into the category of bank credits (flat rate yield in 2023 provisionally 0.36%) or other assets (flat rate yield in 2023 of 6.17%). The government proposes to include membership rights in a Homeowner's Association (vereniging van eigenaren, VvE) and funds in a clients' funds account to the (lower-taxed) category of bank credits retroactively from 1 January 2023.

Mutual claims and debts

As of 1 January 2023, claims will be subject to a higher flat rate yield (6.17%) than for debts (provisionally 2.46% in 2023). This results in higher box 3 income for mutual claims and debts between tax partners and between parents and minor children than applicable under the scheme until 1 January 2023. To avoid this, the government proposes to exclude these claims and debts from box 3 retroactively as of 1 January 2023 (tax-exempt).

• Take note! Mutual claims and debts may, for example, arise through a setoff clause included in the antenuptial agreement.

Co-parenting subject to tighter income-dependent combination tax credit

The income-dependent combination tax credit (IACK) is a tax credit for singles or least-earning partners who combine work and care for a child. In co-parenting, care for the child must be shared equally by the co-parents. By a ruling of the Supreme Court, this was already the case in caring for the child for 78 days in a calendar year by one of the co-parents. As of 1 January 2024, co-parents must each take care of the child at least 156 days of the calendar year.

• Tip! The 156-day requirement applies per calendar year, but it remains possible to recalculate that threshold in proportion to the time elapsed in the year that co-parenting begins or ends. The condition for this is that co-parenting lasts for at least six months in that year.

Abolition of early payment discount for income tax payments

The Tax Administration provides an early payment discount for certain provisional income tax assessments if the entire assessment amount minus the early payment discount is paid no later than the first due date. This scheme will be abolished. It remains possible to pay a provisional income tax assessment as a lump-sum payment, but that will no longer have an early payment discount from 2024 onwards.

Stricter requirements for deduction for gifts

As of 1 January 2024, for all gifts in kind of € 10,000 or more, a valuation report is required to be entitled to the tax deduction. That applies to both income tax as well as corporation tax.

Lucrative interest

Property rights wholly or partially acquired as remuneration for work may constitute a lucrative interest. Revenues from this are taxed in box 1 (max. of 49.5% in 2023). This is the case if the property rights are economically comparable to subordinated shares which make up less than 10% of the total subscribed capital in the company. This includes premium and informal capital, too. The government proposes that with effect from 26 June 2023, a shareholder’s loan which does not constitute informal capital, but which does contribute to remuneration for work, should also be taken into account for this assessment. This is a response to court rulings by the Supreme Court and was already announced in a letter dated 26 June 2023.

• Take note! This proposal has retroactive effect from 26 June 2023.

Change relating to the purchase of annuities

The purchase if annuities without tax penalties in the event of incapacity for work will be changed. On exceeding a limit, 20% revisionary interest is no longer due on the full redemption sum but only on what has been excessively redeemed. The Tax Administration already applies this in practice nowadays.

Rectification of tax returns

The government proposes to simplify the rectification of an already submitted income tax return. This is done by a revised digital income tax return form as an application for ex officio reduction. This should make a difference in communications between taxpayers and the Tax Administration. However, the right of a taxpayer to lodge an objection or appeal is explicitly not affected.

• Tip! If both a digital tax return form and a written notice of objection to an income tax assessment are submitted, and reference is made in the notice of objection to the tax return form, then the tax inspector will have to treat these notices collectively as one objection.

Reduction of basic rent for housing benefit

From 2024 onwards, the basic rent will be reduced annually, after a surcharge based on the Housing Allowance Act (Wet op de huurtoeslag, WHT) has taken place. The basic rent is that part of the rent, which is fully for the account of the tenant. Reductions are shown in the table below.

Delayed scale down of tax credit

Since January 2012, the general tax credit (algemene heffingskorting, AHK) in the benefit level of social assistance benefit and benefits related to social assistance (excluding the old-age pension, AOW) has been scaled down. This has been done by scaling down twice the AHK in the calculation of the reference minimum wage to once the AHK. This scale down is being delayed. As a result, when calculating the reference minimum wage as of 1 January 2024 and 1 July 2024, the AHK is taken into account 1.575 times. As of 1 January 2025, the AHK will be reduced by 2.5 percentage points every six months until it reaches once the AHK on 1 January 2036. The consequence is that the social assistance benefit and the benefits related to social assistance increase slightly.

Change in child-related budget

As of 1 January 2024, the following changes will be made in calculating the child-related budget, after a policy-related adjustment and an indexation have taken place.

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