Box 1 – Income from Work and Home
Box 1 is the first and typically most important box in the Dutch income tax system. It covers income from employment: your salary, pension, social benefits, or profit from your own business. Your primary residence also falls under box 1 – meaning you can deduct mortgage interest here, but the deemed rental value (eigenwoningforfait) is also added. The tax rate in box 1 is progressive and has three brackets in 2025: 35.82% up to €38,441, 37.48% from €38,441 to €76,817, and 49.50% on everything above that. The higher your income, the higher the effective rate you pay.
Example
Say you earn €50,000 gross per year. This falls entirely in box 1. On the first €38,441 you pay 35.82% (= €13,770) and on the remaining €11,559 you pay 37.48% (= €4,332). Total: €18,102. Tax credits are then subtracted – the general tax credit and the labor credit – so your net tax bill ends up significantly lower.
Why does this matter?
Almost everyone deals with box 1. It is the box your tax return mainly revolves around. By smartly using deductions (mortgage interest, healthcare costs, donations) you can lower your taxable income in box 1 and pay less tax.
Want to know how this applies to you?
This term is relevant for our Your resident tax sorted. service.