You pay tax on the income you receive from a job or social benefits. However, fortunately, there is a payroll tax credit. This means you have to pay less tax on your earned money. How does this work exactly?
What is payroll tax?
Payroll tax is a combination of income tax and national insurance contributions. As an employee, you automatically pay income tax. This also applies if you are retired, receive AOW or another benefit. The government uses this to fund social benefits and public services, for example. You pay national insurance contributions for, among other things, the AOW (General Old Age Pensions Act) and the Wlz (Long-term Care Act). You do not have to pay payroll tax yourself; your employer or benefits agency does this for you. In 2024, a tax rate of 36.97 percent applies to special remuneration up to an income of €75,518 gross. From €75,518, it is 49.5 percent. To prevent having to repay money on special remunerations, such as holiday pay, an additional settlement percentage is applied. On the Belastingdienst website, you can see what this means for you.
What is the payroll tax credit?
The payroll tax credit is a discount on the payroll tax you pay for work or benefits. The payroll tax credit consists of two parts: the employment tax credit and the general tax credit. The employment tax credit is for employees over 18 years old, and the general tax credit is for everyone. For the payroll tax credit, it does not matter whether you have a fiscal partner or not: the payroll tax credit is personal. Find out more about tax credits and how they can help you pay less tax.
How much payroll tax credit do I receive?
The amount of payroll tax credit you receive depends on the amount of your salary or social benefits. In 2024, the maximum employment tax credit you can receive is: € 5,532. If you earn more than € 39,957 gross per year, the employment tax credit gradually decreases.
How do I get payroll tax credit?
You can apply for payroll tax credit through your employer or benefits agency. Often, an employer will provide you with a form - the payroll tax declaration - when you start employment; on this, you can indicate whether your employer should apply the payroll tax credit. If you allow your employer to do this, you will automatically receive more salary or a higher benefit payment. If you do not have your employer apply the payroll tax credit directly, you can reclaim the amount you overpay in income tax in your annual income tax return.
Payroll tax credit on or off with multiple jobs
Do you have multiple employers or a benefits agency? Be aware that you can only apply payroll tax credit with one employer or benefits agency. It might not be something you immediately consider after negotiating your salary for an (additional) job, but this is important because otherwise you may receive too much employment tax credit.
Enable or disable your payroll tax credit for multiple jobs: let the highest-paying employer or benefits agency apply the payroll tax credit. This way, you keep more each month!