If you're running a business in the Netherlands, your profit is taxed through what the Dutch call "box 1," the category for income from work and business. The Dutch income tax brackets 2026 split that income into three bands, each taxed at its own rate, and understanding how they stack is the difference between guessing at your tax bill and actually planning for it. Here's how the 2026 bands work, a worked example, and why the headline rate for high earners is not what most people end up paying.
Dutch income tax brackets 2026 at a glance
| Bracket | Taxable income | 2026 rate |
|---|---|---|
| Bracket 1 | Up to €38,883 | 35.75% |
| Bracket 2 | €38,883 to €78,426 | 37.56% |
| Bracket 3 | Above €78,426 | 49.50% |
These rates apply to anyone below the Dutch state pension age (AOW), which covers essentially every expat founder running a sole proprietorship or a BV. If you've already reached that age, a different first-bracket rate applies, covered further down.
Why your marginal rate is not your average rate
The most common misunderstanding about this system: a founder who hears "profit above €78,426 gets taxed at 49.5%" assumes their entire profit is taxed at that rate once they cross the line. That's not how a bracket system works anywhere, including here. Only the portion of your income that actually falls within a given bracket is taxed at that bracket's rate. The first €38,883 is always taxed at 35.75%, the slice between €38,883 and €78,426 at 37.56%, no matter how much higher your total profit climbs above that.
So your marginal rate, the rate on your last earned euro, is always higher than your average rate across your whole profit. That gap is exactly why the top-line numbers look harsher than what actually lands on your tax bill.
A worked example: €55,000 in taxable profit
Say your taxable profit, after the deductions you're entitled to as a self-employed founder, comes out to €55,000.
- Bracket 1: €38,883 × 35.75% = €13,901
- Bracket 2: (€55,000 - €38,883) × 37.56% = €16,117 × 37.56% = €6,054
- Income tax before tax credits: €19,955
That works out to an average rate of about 36.3% (€19,955 divided by €55,000), while your marginal rate is 37.56%, since your last earned euro still fell in bracket 2. If your profit had crept just above €78,426, only that small slice above the threshold would be taxed at 49.5%, not the rest of it.
In practice, this amount drops further once the general tax credit and the labor tax credit are applied, both of which depend on your total income, so we won't estimate those here. That calculation, and making sure every deduction you qualify for is actually used, is the part we handle for our clients.
Already at Dutch retirement age?
If you've reached the AOW age, you no longer pay the state pension contribution that's baked into the first bracket, which brings that rate down sharply: 17.85% instead of 35.75%, up to the same €38,883 threshold. If you were born before January 1, 1946, that threshold sits slightly higher, at €41,123. Brackets 2 and 3 stay the same as above either way: 37.56% between €38,883 and €78,426, and 49.5% beyond that.
Frequently asked questions
Do these brackets apply to sole proprietorship (eenmanszaak) profit, or just salary? Both. Box 1 doesn't distinguish between salary from employment and profit from a business, it's a single total of taxable income from work. If you combine a job with your own business, both amounts are added together before these brackets apply.
Will the brackets change for 2027? The cabinet's Belastingplan 2027 proposes raising bracket 1 to 36.23% (up to €39,247) and bracket 2 to 38.16% (€39,247 to €78,426), with bracket 3 staying proposed at 49.5% above that. None of it is final until parliament (the Tweede and Eerste Kamer) approves the tax plan, which usually doesn't happen until December. We track changes like this as they become official, including in our piece on the declining self-employed deduction.
Do I need to apply these brackets myself when filing? No, the Dutch tax authority (Belastingdienst) calculates this automatically from the taxable income you report. What actually matters is getting that taxable income right in the first place, every deduction applied correctly, nothing missed and nothing overclaimed.
New to the Dutch tax system?
Working out which bracket your profit falls into is one of the more straightforward parts of moving a business here, especially next to everything else that changes: company structure, invoicing rules, filing deadlines. Sophy & Co. supports expat founders from well before incorporation, not only once a company already exists, and can introduce you to the banks, lawyers, notaries, and fellow expats already in our network who've been through the same setup.
Our team speaks English, Dutch, Italian, Chinese, Spanish, Papiamento, German, and a bit of French and Polish, is woman-led, and welcomes LGBTQIA+ founders without exception. Book a call and explain your situation in whichever language suits you best.
Want the full picture of what you'll owe?
Your tax bracket is only one part of the sum, deductions, the entrepreneur allowance, and the profit exemption all shift your taxable income before these rates even apply. At Sophy & Co. you share your invoices with us and we work out the rest, for a fixed monthly fee with no surprises.
Take a look at our services and pricing, or get in touch for a no-obligation conversation.
For the official rates, see the Belastingdienst or the Dutch Chamber of Commerce (KVK).