Summer agreement 2025: reforms in personal and corporate taxation

Personal income tax

Tax-free allowance increases to €15,300

By 2029, the tax-free portion of income will rise from €10,910 to €15,300. This means a larger share of your salary will no longer be taxed, resulting in a higher net income for all employees.

Higher allowance for the first dependent child

Families will benefit from a higher tax allowance for the first dependent child, increasing from €1,980 to €2,650. This 33% rise provides extra financial support, with particular attention to the growing number of single and one-parent households.

Phasing out of the marital quotient

The marital quotient, which allows income redistribution between partners (e.g., allocating part of the working partner’s income to the non-working spouse), will be gradually phased out. For non-retirees, this tax benefit will be halved by 2029. For retirees, a 20-year phase-out plan will be implemented.

Reform of special social security contribution for singles

Single individuals will benefit from a reform in the special social security contribution, enabling them to retain up to €365 more per year.

Increased work bonus for low wages

The work bonus, an income tax reduction for low earners, will be expanded. As a result, net wages will increase without any changes to gross pay. By 2029, the net minimum wage is expected to nearly equal the gross amount, making employment more financially rewarding.

Taxation on living wage and unemployment benefits

From 2026 onward, the living wage (leefloon) will be considered taxable income. Additionally, the tax reduction on unemployment benefits will be gradually eliminated. This is part of a broader strategy to incentivize employment.

A more attractive tax climate for entrepreneurs

Extra efforts will be more strongly rewarded through the following measures:

• Self-employed individuals without a company will benefit from a business deduction of €650, rising to €900 by 2029. This is in addition to a doubled tax credit, which increases from €3,750 to €7,500.

• The tax increase for insufficient advance payments will be abolished.

• In the IT sector, the favorable tax regime for copyright income will be reinstated.

• Retirees will be able to earn extra income at a more favorable rate: a maximum of 33% tax instead of 50%.

• For online sales via platforms like Vinted, a tax exemption of up to €2,000 per year will apply, without triggering the 33% tax rate.

Corporate income tax

Adjustment to the reduced rate threshold

The minimum salary required to qualify for the reduced corporate tax rate (20% on the first €100,000 in profits) will increase from €45,000 to €50,000 as of 2026.

In addition, companies will lose access to the reduced rate if the total lump-sum valued benefits in kind (VAA) exceed 20% of the gross salary.

Additional levy on benefits in kind (VAA)

The government aims to restrict the use of lump-sum valued benefits in kind (such as company cars, private use of laptops or smartphones, and utilities linked to housing) in order to relieve pressure on gross salaries. A 7.5% additional tax will be applied to the portion of benefits that exceeds 20% of total taxable remuneration. The exact allocation of this cost between employer and employee still needs clarification.