Income Taxes for 2020 - What will change

12/27/2019 Team Taxation

The dutch goverment aims to make working more profitable. Starting in 2020 there will be only two tax rates on your income. The proposed tax rates for income from work (Box 1) will be lowered and limited to a base rate of 37.10% for income up to €68,507 and a top rate of 49.5% for income exceeding €68,507.

Further changes Box 1 – Deductions Certain deductible expenses will only be deductible against a maximum rate of 46% (instead of the top rate). These expenses concern: alimony payments, specific healthcare expenses, weekend expenditure for handicapped individuals, educational expenses, charity donations, self-employed deductions, the deduction for small and medium-sized enterprises and the exemption for the business use scheme.

Box 1 – Mortgage interest deduction This limitation of income tax deductions is in line with the mortgage interest deduction. The maximum deduction for mortgage interest is 46%. It is proposed that the mortgage interest deductions will be further limited in future years by 3% per year to the base rate in 2023.

Box 1 – General levy rebate The general levy rebate will be increased by €78 in 2020 and by €2 in 2021. The maximum general levy rebate in 2020 will be €2,711 and then €2,801 in 2021.

Box 1 – Labor levy rebate The labor levy rebate will also be increased in three steps. The maximum labor levy rate in 2020 will be €3,819

Source - Goverment websites and mondaq