Nearly 20 percent of gross household income paid in taxes and national insurance contributions

In 2008, Dutch households paid 19.2 percent of their gross income in income tax and national insurance contributions. A provisional estimate for 2009 shows a marginal increase to 19.5 percent. After the introduction of the new tax system in 2001, the burden of taxation and social security contributions diminished during a period of several years, but is currently almost back at the level of 2001.

Net burden taxes and contributions national insurances on gross income

Income tax rate for highest income bracketss 27.5 percent

Higher incomes pay more tax. In 2008, the net burden for the 10 percent households with the highest gross incomes was 27.5 percent, whereas the lowest incomes paid less than 5 percent.

The progressive tax system in the Netherlands levies higher tax rates against wealthier households. On average, the tax rate paid over the gross income is nearly 12 percentage points higher for wealthier households than for the lowest household incomes.

Lower incomes benefit most by tax cuts

Proportionally, lower incomes also benefit more from tax measures which reduce the tax burden. The gross burden imposed on the lowest income brackets by taxation and national insurance contributions was reduced by 19.8 percentage points in 2008 as a result of various tax deduction, exemption and discount regulations versus 8.6 percentage points for the highest income category.

In relative terms, households in the lowest income bracket benefit most from levy discounts. The wealthiest half of the population benefit more from tax-deductible items and tax exemption regulations.

Gross burden taxes and contributions national insurances and tax relief regulations, e.g. tax-deductible items, tax exemption and tax discount regulations by income category, 2008**

Tineke de Jonge, Peter Meuwissen and Reinder Lok