Tax Credit (Heffingskorting)
Tax credits (heffingskortingen) are amounts directly subtracted from the tax you owe. Unlike deductions (which lower your income), tax credits reduce your actual tax bill – euro for euro. The most important ones are the general tax credit and the labor credit. The general tax credit is available to everyone with income, but the amount decreases as you earn more. In 2025, the maximum is approximately €3,362, and at an income above approximately €75,518, the credit is €0. The labor credit is only for workers and amounts to a maximum of approximately €5,532. There are also the income-dependent combination credit (for working parents), the young disabled credit, and the senior citizen credit.
Example
You earn €35,000 per year. Your general tax credit is approximately €3,070 and your labor credit approximately €4,900. Together that's €7,970 directly subtracted from your tax bill. Without tax credits you'd pay €12,940 in tax (36.97%), but thanks to the credits you only pay €4,970.
Why does this matter?
In practice, tax credits ensure your effective tax rate is much lower than the box 1 rate. They are usually automatically processed by your employer or the tax authorities. But always check if you're not missing any credits, like the combination credit as a working parent.