Arbeidskorting (Employment Tax Credit)
Use the Arbeidskorting (Employment Tax Credit) Calculator →What is Arbeidskorting (Employment Tax Credit)?
The arbeidskorting is a Dutch employment tax credit that reduces income tax for people with wages, salary, or other employment income. It is designed to make work financially more rewarding compared to benefits, by lowering the effective tax rate on earned income.
For 2026 the credit builds in four segments: it grows from 0 to €996 on income up to €11,965 (at 8.324%), continues growing to a peak of €5,685 at €45,592, then phases out at 6.51% per euro until it reaches zero at €132,920. Above €132,920 the credit is nil.
When to use Arbeidskorting (Employment Tax Credit)
Apply the arbeidskorting whenever computing Dutch net salary for an employee. It is one of the two credits that directly reduce Box 1 income tax. It is not available to self-employed individuals using the zelfstandigenaftrek (entrepreneur deduction), benefit recipients, or pensioners - they have different credits.
Worked examples
| Gross income | Arbeidskorting | Notes |
|---|---|---|
| €20,000 | €3,744 | Building phase (segment 2) |
| €45,592 | €5,685 | Maximum credit reached |
| €80,000 | €3,357 | Phase-out phase (segment 4) |
| €132,920+ | €0 | Credit fully phased out |
Common pitfalls
The arbeidskorting is often omitted in quick net salary estimates. Missing it results in significantly overstating the tax burden, especially at mid-range incomes where the credit is near its maximum. Also note: the credit has separate (lower) amounts for AOW recipients above state pension age.
Frequently asked questions
At what income is the arbeidskorting at its maximum?
The arbeidskorting reaches its maximum of €5,685 at an employment income of €45,592 in 2026. Below that income it builds progressively. Above €45,592 the credit phases out at 6.51 cents per euro until it is fully gone at €132,920.
Is the arbeidskorting the same as the algemene heffingskorting?
No. The algemene heffingskorting (AHK) is available to all Dutch taxpayers. The arbeidskorting is only for people with employment income. Both are applied to reduce Box 1 income tax. Together they can cut the effective tax rate substantially, especially for incomes in the €30,000-€60,000 range.