Heffingskorting (Tax Credit)

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What is Heffingskorting (Tax Credit)?

A heffingskorting is a Dutch tax credit that reduces the income tax owed - not the taxable income. This makes it more valuable than a deduction: a €1,000 credit saves exactly €1,000 in tax regardless of your bracket, whereas a €1,000 deduction saves only €355-€495 depending on which bracket you are in.

The two main heffingskortingen for employees are the algemene heffingskorting (general tax credit) and the arbeidskorting (employment credit). Both are calculated as a function of income and phase out at higher incomes. They are applied after Box 1 income tax is computed.

When to use Heffingskorting (Tax Credit)

Use when calculating Dutch net salary from gross. Both credits reduce your final income tax bill. If the combined credits exceed your income tax, the excess is generally not refundable - you cannot pay negative tax. Use the Netherlands income tax calculator to compute your exact credits automatically.

Worked examples for Heffingskorting (Tax Credit)

This table quickly gives you the overview you need to understand Heffingskorting (Tax Credit) and its most important comparisons.

Common pitfalls

The heffingskortingen are non-refundable: they can reduce income tax to zero but cannot generate a cash refund on their own. They also phase out - higher earners receive smaller credits. Many online salary calculators only apply the AHK and miss the AK, or vice versa, leading to inaccurate take-home estimates.

Frequently asked questions about Heffingskorting (Tax Credit)

What is the difference between the algemene heffingskorting and the arbeidskorting?

The algemene heffingskorting (AHK) is available to all Dutch taxpayers below state pension age. The arbeidskorting is only available to people with employment income - it rewards work. Both phase out at higher incomes. A typical €60,000 employee receives around €1,178 AHK and €4,747 AK in 2026.

Are the heffingskortingen applied by the employer or the tax authority?

The employer deducts payroll tax (loonheffing) monthly, which incorporates an estimated AHK. The full picture - including the arbeidskorting - is reconciled in the annual income tax return (aangifte inkomstenbelasting) with the Belastingdienst (Dutch tax authority).

Test your knowledge

Quiz: how well do you know heffingskorting?

5 questions · ~2 min

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1. Why is a heffingskorting more valuable than an income tax deduction of the same amount?

A A deduction reduces taxable income proportionally, while a heffingskorting only applies to the lowest income bracket and is capped at €1,000 per year B A heffingskorting reduces the tax owed directly, so a €1,000 credit saves exactly €1,000 in tax regardless of your bracket; a deduction only saves €355-€495 because it reduces taxable income, not the tax itself C A heffingskorting is indexed to inflation annually, while deductions remain fixed, making the credit more valuable in high-inflation years D A heffingskorting can be carried forward to future tax years if unused, while a deduction expires at year-end and cannot offset future income

ℹ The definition states a heffingskorting reduces tax owed - not taxable income. A €1,000 credit saves exactly €1,000 in tax regardless of bracket, whereas a €1,000 deduction saves only €355-€495 depending on which bracket applies.

2. What is the key difference between the algemene heffingskorting (AHK) and the arbeidskorting (AK)?

A The AHK is exclusively for high earners above €80,000 where it provides targeted relief, while the arbeidskorting applies to all taxpayers at a flat rate B Both credits apply to all Dutch taxpayers equally, but the AHK phases out before the arbeidskorting, creating a smooth income progression with no cliff C The AHK is applied by the employer through monthly payroll tax; the arbeidskorting is only available via the annual tax return and cannot appear on monthly payslips D The AHK is available to all Dutch taxpayers below state pension age; the arbeidskorting is only available to people with employment income, rewarding work over other income types

ℹ The FAQ states the AHK is available to all Dutch taxpayers below state pension age, while the arbeidskorting is only available to people with employment income. It is designed to make work financially more rewarding compared to benefits.

3. According to the examples table, what is the AHK credit for someone earning €80,000 gross?

A €0 - the AHK has fully phased out by €80,000 gross income B €1,178 - the same AHK credit applied at €60,000, as it remains flat above that level C €1,628 - the maximum AHK credit, which is locked in once income exceeds €40,000 D €2,109 - the same as the arbeidskorting at €80,000, since both credits converge at this income level

ℹ The examples table shows that at €80,000 gross, the AHK credit is €0 - it has fully phased out. The arbeidskorting at that income is €2,109, which is the only credit still reducing the net tax bill.

4. What does the pitfalls section warn about many online Dutch salary calculators?

A They apply both credits at their maximum values regardless of income, overstating take-home pay for higher earners in the phase-out range B They confuse Box 1 and Box 3 income, misclassifying investment income as employment income and incorrectly applying the arbeidskorting C Many only apply one of the two credits (AHK or AK) and miss the other, leading to inaccurate take-home estimates D They assume the credits are refundable and show a cash payout that the Belastingdienst will not actually pay

ℹ The pitfalls section warns that many online salary calculators only apply the AHK and miss the AK, or vice versa, leading to inaccurate take-home estimates. Both credits must be applied together for an accurate net salary figure.

5. In practice, who applies the heffingskortingen and when are they finalized?

A The employee claims both credits directly from the Belastingdienst each month by submitting a digital form, with credits deposited to their bank account B Both credits are applied entirely through the annual income tax return; employers do not incorporate any credits into monthly payroll calculations C The Belastingdienst applies both credits automatically when they receive the employer's annual payroll filing, requiring no action from the employee D The employer incorporates an estimated AHK into monthly payroll tax (loonheffing), and the full picture - including the arbeidskorting - is reconciled in the annual tax return with the Belastingdienst

ℹ The FAQ explains that the employer deducts payroll tax (loonheffing) monthly, incorporating an estimated AHK. The full picture - including the arbeidskorting - is reconciled in the annual income tax return (aangifte inkomstenbelasting) with the Belastingdienst.

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