Box 1 in the Netherlands: Tax Rates, Income and Mortgages

Tax year: 2026 | Updated: 28 October 2026

Box 1 is the part of Dutch income tax that covers income from work and your main home. It includes salary, business profits, pensions and the tax treatment of an owner-occupied home. Qualifying mortgage interest is deducted here too.

For homebuyers, the important question is how these rules affect the amount left in your bank account each month. Your income, mortgage interest, property value and tax position all influence the answer.

This guide explains Box 1 in the Netherlands, the 2026 tax brackets and the differences between Box 1, Box 2 and Box 3. You will also find worked examples for homeowners and points that matter if you have moved to the Netherlands from abroad.

Buying a home in the Netherlands? Book a free mortgage consultation to discuss your mortgage options and monthly housing budget.

What income falls under Box 1?

Box 1 is also called inkomen uit werk en woning, meaning income from work and home. Common sources include:

• Salary and taxable employment benefits.
• Profits from a sole proprietorship or other business taxed through personal income tax.
• Freelance earnings and other work income.
• Pension, AOW and taxable benefits.
• Annuity payments and certain other periodic payments.
• Received spousal maintenance.
• The taxable benefit associated with your main home, called the eigenwoningforfait.

Some foreign income also needs to be reported. Whether the Netherlands can tax it depends on your residence, the type of income and any applicable tax treaty.

Box 1 income is therefore not necessarily the same as your gross salary. A person earning a salary can have additional taxable income, deductions or both.

What are the Box 1 tax rates in 2026?

The following rates apply if you have not reached AOW age during 2026 and are subject to the standard Dutch national insurance contributions.

The first-bracket percentage includes income tax and national insurance contributions. Different contribution obligations can affect the calculation for international workers.

Do you pay the highest rate on your whole salary?

No. The rates apply progressively. If your taxable Box 1 income is €60,000, only the part above €38,883 falls in the second bracket. Your entire income is not taxed at 37.56%.

Before tax credits, the calculation is approximately:

• €38,883 × 35.75% = €13,900.67.
• €21,117 × 37.56% = €7,931.55.
• Total: €21,832.22 before tax credits and other adjustments.

Your final tax bill also takes account of tax credits and tax already withheld from your income. This example is a bracket calculation, not a net salary calculation.

What changes after AOW age?

If you reached AOW age before 2026, the first-bracket rate is generally 17.85%. The upper limit is €38,883 for people born on or after 1 January 1946 and €41,123 for people born before that date. If you reach AOW age during 2026, the first-bracket rate depends on the month concerned. The higher-bracket rates remain 37.56% and 49.50%.

How do you calculate taxable Box 1 income?

A practical starting point is:

Income from work and other Box 1 sources + taxable home benefit − qualifying deductions = taxable Box 1 income.

Suppose you have €60,000 of taxable employment income, an eigenwoningforfait of €1,750 and €12,000 of qualifying mortgage interest. With no other adjustments, your taxable Box 1 income is:

€60,000 + €1,750 − €12,000 = €49,750.

The €12,000 deduction does not mean you receive €12,000 back. It reduces the income on which tax is calculated. Tax credits, deduction restrictions and your wider return determine the actual saving.

Is your home in Box 1 or Box 3?

An owner-occupied property that qualifies as your main home normally falls under the Box 1 own-home rules. A second home or a property held as a private investment normally belongs in Box 3.

The home and the loan must be assessed separately. Your main home can belong in Box 1 while part of the borrowing belongs in Box 3. The fact that a bank calls a loan a mortgage does not make all of its interest deductible.

There are also exceptions for homes during a move, construction, separation or temporary work abroad. A property does not automatically move to Box 3 the moment you stop living in it.

What is the eigenwoningforfait?

The eigenwoningforfait is an amount added to your taxable income for a qualifying owner-occupied home. It is usually calculated using the WOZ value, rather than the purchase price or mortgage balance.

For 2026, use the WOZ assessment with a valuation reference date of 1 January 2025.

For a home with a WOZ value of €500,000, the full-year amount is €1,750. This is an income addition, not a €1,750 tax bill. The amount may need adjusting if the home qualifies for only part of the year.

How does mortgage interest deduction work in Box 1?

The Dutch term for mortgage interest deduction is hypotheekrenteaftrek. Eligibility depends on the loan, its purpose and your tax position.

For new own-home debt taken out from 1 January 2013, the loan generally needs to be repaid at least on an annuity basis within 30 years. A linear repayment schedule can also meet the requirement. Existing qualifying debt from before 2013 can have different rules.

The interest deduction period is limited. Refinancing an existing loan does not automatically start a new 30-year entitlement.

In 2026, the deduction rate for qualifying own-home interest and costs attributable to the highest bracket is limited to 37.56%. Paying 49.50% tax on part of your income does not mean you receive a 49.50% mortgage-interest deduction.

Read the full mortgage interest deduction and tax refund guide for the deduction conditions and refund process. If you are choosing a repayment structure, compare annuity and linear mortgages.

Worked example: income in the second bracket

Assume you have €60,000 of taxable employment income before the home adjustment, a €500,000 WOZ value and €12,000 of qualifying interest for a full year. There are no other deductions or home-related costs in this example.

The entire reduction stays within the second bracket in this example. The €1,000 average monthly interest cost would become approximately €679 after this tax effect. Mortgage repayments, insurance, maintenance and other ownership costs are additional. Tax-credit effects can change the final result.

Why the same shortcut can be wrong for a high income

Suppose the same home and interest relate to someone with €100,000 of taxable employment income. The income remains above the highest-bracket threshold after the home deductions.

Ignoring tax-credit effects and other adjustments:

• The interest deduction gives €12,000 × 37.56% = €4,507.20 of tax relief.
• The eigenwoningforfait adds €1,750 × 49.50% = €866.25 of tax.
• The combined benefit is €3,640.95 per year, approximately €303.41 per month.

The interest deduction and the home-income addition can therefore have different effective rates. Multiplying their net balance by 37.56% is not a reliable shortcut for everyone.

Want to understand your own housing budget? Request a free mortgage consultation. Discuss your income, borrowing options and expected monthly payments before making an offer.

Which home-buying costs are deductible?

Qualifying financing costs can usually be deducted in the year you pay them. Purchase costs and mortgage repayments are treated differently.

Interest on qualifying renovation borrowing can be deductible even though the renovation invoices themselves are not. Keep invoices and evidence showing how borrowed money was used.

What if you have equity, a small mortgage or no mortgage?

Selling a home with equity

The bijleenregeling can restrict the interest deduction on your next home if you have an eigenwoningreserve, broadly the equity reserve arising from an earlier sale. Borrowing extra to keep that equity in savings does not automatically make the extra interest deductible. The reserve generally expires after three years.

Little or no mortgage interest

If your eigenwoningforfait exceeds your deductible home costs, you may qualify for the deduction for little or no own-home debt, often called the Hillen deduction. In 2026, it offsets 71.867% of the qualifying difference. A mortgage-free home can therefore still create taxable Box 1 income.

For example, if your eigenwoningforfait is €1,750 and you have no deductible home costs, approximately €492.33 remains taxable after this deduction, subject to the applicable conditions and rounding.

Which other deductions can reduce Box 1 income?

Depending on your circumstances, deductions may include qualifying annuity contributions, public-transport commuting deductions and personal deductions such as eligible gifts, specific medical expenses or paid spousal maintenance.

These deductions have their own conditions and limits. Pension-related annuity contributions, for example, normally depend on available annual or unused contribution room. Ordinary study costs are no longer generally deductible from the 2022 tax year onward.

A deduction lowers taxable income. A tax credit lowers the tax calculated. They are different parts of the return, and both can affect the final benefit of a home-related deduction.

What should expats check about Box 1?

Tax residence and foreign income

Dutch tax residents generally need to report worldwide income, with treaty relief where applicable. If you live abroad, different rules apply. Qualifying non-resident taxpayer status can provide access to deductions, but eligibility depends on conditions including your country of residence and how much income is taxed in the Netherlands. Receiving Dutch salary alone does not settle the question.

In the year you immigrate or emigrate, the resident and non-resident periods need separate attention. Have cross-border income and home ownership assessed together.

The 30% ruling

The 30% ruling does not remove your salary or home from the Box 1 system. A tax-free employment allowance can affect taxable employment income and the resulting mortgage tax benefit.

Partial non-resident taxpayer status concerns Box 2 and Box 3. The option was abolished from 2025, with transitional protection through 2026 for eligible people who used the expat scheme before 2024. It is not a general exemption from Box 1 tax.

See our 30% ruling mortgage guide for the mortgage-planning context.

Buying with a fiscal partner

Eligible fiscal partners can divide the net income and deductions from their home between their tax returns. They cannot freely divide employment salaries in the same way. Allocating everything to the higher earner is not always the best result because deduction restrictions and tax credits also matter.

Moving abroad or renting out your home

Before renting out a former main home, check whether it will remain under the own-home rules. A home held for private rental will generally fall in Box 3, while temporary absence and moving-home exceptions can produce a different result. Lender permission and tax treatment are separate issues.

What is the difference between Box 1, Box 2 and Box 3?

You can have income in all three boxes. A company owner can receive a salary in Box 1 and dividends in Box 2, while also holding private savings in Box 3.

You cannot simply choose the box with the lowest tax. The nature of the income, asset or debt determines the applicable treatment.

How do you claim a Box 1 mortgage tax refund?

You report the relevant home details, qualifying interest and deductible costs in your Dutch income tax return. Check the prefilled amounts against your lender statement, WOZ assessment and invoices.

If you qualify, you can also request a provisional assessment, called a voorlopige aanslag, to receive an estimated refund during the year. This changes the timing of the benefit rather than creating a second deduction.

Keep the estimate current when your income, interest, mortgage or living situation changes. Amounts already received are reconciled with your annual tax return.

For a borrowing indication, use our mortgage calculator for the Netherlands. It estimates mortgage capacity and payments. It does not replace a complete income tax calculation.

Frequently asked questions about Box 1

Is Box 1 tax the same as payroll tax?

No. Payroll withholding is an advance collection through your salary or pension. Your income tax return combines the relevant income, deductions, credits and tax already withheld to establish the final position.

Can my mortgage be split between Box 1 and Box 3?

Yes. For example, a qualifying home-purchase portion can fall in Box 1 while an additional amount used for personal spending falls in Box 3. The purpose and conditions of each loan portion matter.

Is an interest-only mortgage deductible in Box 1?

A new interest-only loan normally does not satisfy the repayment requirement for new own-home debt. Older qualifying loans can fall under transitional rules. Check the original borrowing date and tax history before changing the loan.

Is Box 1 income the same as my mortgage borrowing income?

No. Taxable Box 1 income is calculated under tax rules. A lender assesses sustainable income and financial commitments under lending rules. A tax deduction does not create an equal reduction in the income a lender will accept.

What if my Box 1 income is negative?

A recognised Box 1 loss can generally be offset against positive Box 1 income from the previous three years and the following nine years. It cannot simply be deducted from Box 2 or Box 3 income. Special rules apply to unused personal deductions.

Do I need the 30% ruling to deduct mortgage interest?

No. The 30% ruling is not a requirement for mortgage interest deduction. Your tax position, home and qualifying loan determine eligibility.

Make your mortgage decision with the full monthly picture

A mortgage should fit your income today and remain manageable when your tax benefit, employment or plans change. Compare the gross payment, expected tax effect, repayments and other ownership costs together.

Expat Mortgage Platform helps international buyers understand their mortgage options in English. Book your free mortgage consultation to discuss your buying budget and next steps.

Official sources

• Belastingdienst: Box 1 income and tax rates.
• Belastingdienst: calculating the eigenwoningforfait.
• Belastingdienst: mortgage interest deduction conditions.
• Belastingdienst: deduction restriction for high incomes.
• Belastingdienst: deductible own-home costs.
• Belastingdienst: fiscal partnership.
• Belastingdienst: partial non-resident taxpayer status.
• Belastingdienst: applying for a provisional assessment.