2026 Tax Plan: steps towards a better tax system

News item | 16-09-2025 | 15:44

Fuel excise duties and income tax

To keep prices at the pump affordable, the current reduction in excise duties on petrol, diesel and LPG will be extended for another year until 1 January 2027. The duties (per litre) will remain at 79 cents for petrol, 52 cents for diesel and 19 cents for LPG, just as in 2025.

In order to fund the reversal of the increase in VAT on culture, media and sport, the income tax brackets and tax credits will not be fully adjusted in line with inflation. As a result, people’s income will fall slightly sooner into a higher income tax bracket. The upper threshold for the first income tax band will be raised from €38,441 to €38,883 in 2026, while the upper threshold for the second income tax band will be raised from €76,817 to €79,137.

The tax relief scheme for non-Dutch employees temporarily residing in the Netherlands (the extraterritorial cost reimbursement scheme or ‘ETK regeling’) will be scaled back as of 2026. Contrary to the scheme’s intended purpose, it does not currently offer a level playing field between those employees who incur extra costs and those who do not. The scheme is therefore being scaled back by abolishing two deductions: the deduction for additional costs of living, including for gas, water, electricity and other utilities, and the deduction for additional (non-business) costs incurred in making telephone calls to the country of origin.

Taxes on wealth

The government is committed to ensuring fairness when capital is passed on by inheritance to the next generation. A number of changes are therefore being made to gift and inheritance tax. For example, arrangements involving unequal allocations of assets between partners prior to death or divorce are being tackled. As a result, at the end of a marriage spouses will each pay gift or inheritance tax on half of the general community of property, even if that property was unevenly allocated between them on paper. The time limit for filing inheritance tax returns will also be extended, from 8 to 20 months after the death of the person concerned. This will give the next of kin more time to file returns.

In order to ensure that the compensation for box 3 remains affordable, a few adjustments are being made to box 3. The capital yield tax allowance is being reduced from €57,684 to €51,396. The notional rate of return on other assets is changing from 5.88% to 7.78%. Taxpayers can also make of use the counterevidence arrangements in 2026 for submitting proof of the returns they have actually earned.

Business owners and businesses

In order to ensure that private equity managers pay sufficient tax, the ‘lucrative interest’ scheme is being amended. At present these taxpayers pay less tax on the capital they accumulate as part of their salary (carried interest) than a taxpayer with capital in box 3. The government considers this to be undesirable. A number of changes are therefore being made to the lucrative interest scheme to bring the box 2 tax rate for private equity managers into line with the box 3 tax rate, at 36%.

In March 2025 the Supreme Court ruled that it is permissible to deduct more losses from Dutch profits when subsidiaries are wound up. In order to offset this setback arising from the liquidation loss relief scheme, the invalidity insurance fund (AOF) contribution is being raised by 0.08%. This is the compulsory contribution paid by employers to fund invalidity insurance benefits, for instance under the Work and Income (Capacity for Work) Act (WIA) and the Invalidity Insurance Act (WAO). It is also the intention to amend the rules on foreign exchange gains from subsidiaries as of 1 January 2027.

Climate policy and health

Various measures are being taken for individuals and businesses as further steps in the climate transition. However, their competitive position is taken into account. For instance, the government wants to continue the process of making vehicles in the Netherlands more sustainable. That is why a number of incentives for zero-emission vehicles are being introduced. From 2027 employers will pay more if they offer their employees non-electric vehicles. The reduction in motor vehicle tax is being increased from 25% to 30%. In addition, the lower rate of car and motorcycle tax (BPM) is being extended to apply to zero-emission special categories of cars and zero-emission motorcycles. At the same time the BPM rates will be adjusted so that there is still a sufficient incentive to make internal combustion vehicles even more fuel efficient.

Differentiation will be introduced to flight tax, according to whether flights are short-, medium- or long-haul. Shorter flights will be subject to less tax than longer flights. As of 2027 the tax payable for short-haul flights, for instance to Portugal or Denmark, will be €29.40 per flight. The amount payable for medium-haul flights, for instance to Egypt or Turkey, will be €47.24 per flight. And for long-haul flights, for instance to Mexico or South Africa, €70.86 will be payable. However, long-haul flights to the Caribbean part of the Kingdom will be subject to the lowest tax rate.

As of 2026 businesses will pay tax on more of the drinking water that they use. The tax ceiling will be raised from 300 cubic metres to 50,000 cubic metres. In 2027 the tax ceiling will be completely abolished, which means that businesses will pay tax on all of the drinking water that they use. This will ensure that water is used more responsibly. As of 2030 waste disposal charges for waste processors will also be increased and the CO2 levy on waste incineration plants will rise. The government is also open to alternative levies. The rate for all other businesses covered by the CO2 levy will be reduced.

In relation to the consumption tax on non-alcoholic beverages, arrangements under which manufacturers add a small amount dairy to drinks in order to avoid tax will be tackled. This will be done by amending the exemption for dairy and soy drinks. Following the amendment, water, milk, buttermilk and comparable soy drinks will continue to be exempt from the tax.

Next steps

The Tax Plan will be considered by the House of Representatives after the election recess. In December it will be considered by the Senate. The plan only becomes definitive after approval by both houses of parliament.