Two dozen ways the 2027 budget could impact Dutch household wallets

As part of Prinsjesdag in the Netherlands on Tuesday, the Cabinet made public its Budget Memorandum, including plans for collecting tax revenue, cutting taxes, and expenditures for the upcoming year. Here are some of the current plans and how they will affect your wallet. Although it must be said that the current Cabinet does not have a majority in either Parliament house, and therefore there is a long way to go before the collection of budget and tax changes make their way to law.

Purchasing Power Pain

The median purchasing power will drop by 0.1% in 2027; this is accounting for inflation, which the Centraal Planbureau (CPB) calculates at 2.7%, and a projected collective wage increase of 3.8%. For most households, this will lead to a drop of tens of euros in a year, but a couple with a child earning more than 100,000 euros annually could lose 107 euros in a year.

The Cabinet is cutting 350 million euros from the childcare allowance budget. Working parents with young children will receive a larger childcare allowance next year, covering a greater share of their childcare expenses. However, the increase has been scaled back from the original plans, meaning higher-income families will receive less support than previously expected.

Those buying a home to live in will continue to pay a 2 percent transfer tax, but the transfer tax for non-primary residences and other buyers could drop from 8 to 7 percent.

First-time home buyers will remain exempt from paying transfer tax. Their 0-percent rate will apply to a higher maximum purchase price, which the Cabinet wants to increase €555,000 to €615,000. This means that first-time buyers do not need to pay the transfer tax on any home up to €615,000.

Primary income tax increases

The most significant hit to the wallet comes via direct income taxes, which make up the bulk of the 5.8 billion euro additional burden working people can expect to absorb next year. Tax rates are climbing in the first two tranches. The first bracket, which is for incomes up to 39,200 euros per year, will rise from 35.75% to 36.23%, and from 37.56% to 38.16% for the second bracket, which is income ranging from 39,201 to 78,400 euros.

The entry point for the top tax rate of 49.5% is frozen at 78,426 euros, under the Cabinet's proposal. Because inflation and wages are rising, a normal wage indexation will push mid-to-high earners into the top bracket faster, a phenomenon known as fiscal drag or "cold progression". This alone pulls 750 million euros out of taxpayers' pockets.

To partially alleviate this, the employment tax credit will be increased by 173 euros. That will serve as a small tax credit for all working people.

Few changes on company ownership holdings and Box 3 asset tax

Tax on income in Box 2 against money earned from substantial interest in a business is likely to remain at 24.5 percent for the first 69,607 euros earned. It should remain at 31 percent for anything over that threshold.

The Box 3 tax on assets and capital gains is not yet facing changes for 2027, as the issue is divisive within the current coalition government, and it is unclear where the Cabinet can find support for changes. For the time being, the rate is likely to remain at 36 percent on realized or fictive gains, depending on the situation. The tax will likely be levied on holdings above about 61,000 euros for people filing income tax alone, and 122,000 euros for partners filing together.

Corporate profit tax frozen, start-ups get squeezed, innovation gets cheaper

Corporate income tax is expected to be frozen, without an allocation for inflation. Thus, small business owners profiting up to 200,000 euros will pay a 19-percent tax rate. Companies earning higher profit will pay 25.8 percent for anything over that threshold.

Years of cuts on the deduction for self-employed people will likely continue. This should drop by 25 percent to 900 euros.

The tax exemption on profits earned by small- and midsized businesses should remain at 12.70 percent.

The deduction for start-ups will be nearly eliminated. This year, new entrepreneurs were able to shield 2,123 euros from taxes. That will fall almost completely to 10 euros next year, and will be totally abolished the year after.

Businesses that invest in energy-savings assets will be able to deduct 45.5 percent of the cost against the company profit when filing a tax return. That is up from 40 percent last year.

A tax credit for companies earning profits from innovative activities will jump four-fold to a maximum of 100,000 euros.

Healthcare costs will jump, Discounts at work get less advantageous

In healthcare, there are rising premiums and deductibles. The Ministry of Health expects average nominal healthcare premiums to spike by roughly €12.50 per month, pushing average insurance costs to €169 per month. The Jetten Cabinet abandoned a planned sharp policy increase, but the deductible is still being adjusted for inflation, rising from €385 to €400.

Health insurance premiums were previously predicted to increase by about 150 euros. Consumers can expect to pay about 171.50 euros per month next year, or more than 2,000 euros for the year, unless Parliament looks for ways to offer relief.

People who work in retail, supermarkets, and other companies that sell goods will no longer be able to offer employees a 20-percent discount on company products. That was capped at the equivalent of 500 euros in savings per year, tax-free. Such discounts may still be offered, but the manner in which taxes are assessed become more complicated.

Daily life gets more expensive: Fuel, energy, alcohol, water tax hikes

The fuel excise duty may be extended for another year. This will not lead to lower fuel prices, as gasoline prices have risen significantly in recent months. Air travel will be slightly less expensive than initially planned.

The aviation tax on long-haul flights will be set at around 59 euros per passenger, significantly lower than the roughly 70 euros that was first planned. The change does not make flying cheaper, but it does mean the tax increase will be smaller than initially expected.

The energy tax reduction is likely to remain in place next year, but households can expect to pay an average of 140 euros more next year unless the government helps cover rising electricity and gas delivery costs. That excludes fluctuations in energy prices.

Daily expenses will also be more expensive. Surcharges are increasing on alcohol, tap water, and flowers. The excise duty will rise again next year in line with inflation.