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 state pension or another benefit. The government uses this to fund social benefits and public services. You pay national insurance contributions for, among other things, the state pension (AOW) and the Long-term Care Act (Wlz). You do not need to pay payroll tax yourself, your employer or benefits agency does this for you. In 2026, a tax rate of 37.56 percent will apply to special remuneration up to an income of €78,426 gross. From €78,426, it is 49.5 percent. To prevent having to repay money on special remunerations, such as holiday pay, an additional offset percentage is applied. On the Belastingdienst website, you can see what this means for you.
What is payroll tax credit?
The payroll tax credit is a discount on the payroll tax you pay for work or benefits. Payroll tax credit consists of two parts: the employment tax credit and the general tax credit. The employment tax credit is for those working over the age of 18, and the general tax credit is for everyone. For payroll tax credit, it does not matter whether you have a tax partner or not: payroll tax credit is personal. Find out more about tax credits and how you can pay less tax with them.
How much payroll tax credit do I receive?
The amount of payroll tax credit you receive depends on the level of your salary or social benefits. In 2026, the maximum employment tax credit you can receive is: € 5,685. If you earn more than € 45,592 gross per year, the employment tax credit gradually decreases.
How do I receive 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 form, you can indicate whether your employer should apply the payroll tax credit. If you allow your employer to do this, you will automatically receive a higher salary or social benefits. If you do not have your employer apply the payroll tax credit directly, you can reclaim the excess income tax paid during your annual income tax return.
Payroll tax credit on or off with multiple jobs
Do you have multiple employers or a benefits agency? Then 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 will receive too much employment tax credit.
Turn your payroll tax credit on or off with multiple jobs: let the highest-paying employer or benefits agency apply the payroll tax credit. This way, you keep more each month!