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, meaning you pay a lower percentage on the first portion of your income than on the last. In 2025, you pay 36.97% up to approximately €76,000 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. You pay 36.97% tax on this amount, which is €18,485. 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.