Tax credits: how arbeidskorting cuts your bill

The Dutch tax system offers you two powerful tax credits that can significantly reduce what you owe at the end of the year: the algemene heffingskorting (general tax credit) and the arbeidskorting (labour credit). Together, they can cut your tax bill by thousands of euros—but only if you understand how they work, how they phase out, and why a salaried job may have already claimed them. This guide explains exactly how these credits apply to your freelance profit and what to do if you juggle both employment and self-employment.

The two tax credits at a glance#

The Dutch government offers two income-dependent credits that reduce your tax liability directly:

These credits are not the same as deductions. A deduction reduces the profit you're taxed on; a credit directly reduces the tax you owe. A credit is therefore worth more, pound for pound, than a deduction.

The algemene heffingskorting (general tax credit)#

The algemene heffingskorting is available to all Dutch residents paying income tax in box 1 (self-employed and employees). It's income-dependent and phases out as you earn more.

How much is it worth?#

In 2025–2026, the general tax credit is around €2,000 at its maximum—but it phases out rapidly. For freelancers:

• Below €20,000 taxable income: You receive the full credit
• €20,000–€95,000 taxable income: The credit reduces (you lose roughly €2 of credit for every €1 above €20,000)
• Above €95,000 taxable income: The credit is gone (or nearly zero)

The exact amounts change year to year with inflation, so always check belastingdienst.nl for the current year's thresholds.

How it applies to your profit#

The algemene heffingskorting is applied to your taxable income after all deductions. This matters:

1. You calculate your turnover
2. You deduct business costs
3. You deduct entrepreneur deductions (zelfstandigenaftrek, startersaftrek, MKB exemption)
4. You're left with taxable profit
5. Your tax is calculated on that profit
6. Then the algemene heffingskorting reduces that tax bill

If your taxable profit is €35,000, your general tax credit will be reduced compared to someone earning €20,000—but you still get a significant benefit.

The arbeidskorting (labour credit)#

The arbeidskorting is a second credit, specifically designed to support working people. It's smaller than the general credit but follows a similar phase-out structure.

How much is it worth?#

In 2025–2026, the labour credit maxes out at around €900 per year, but again it phases out:

• Below €10,000 taxable income: You receive the full credit
• €10,000–€35,000 taxable income: The credit tapers down
• Above €35,000 taxable income: The credit is gone (or nearly zero)

Who qualifies?#

Both employees and self-employed people in box 1 qualify for the arbeidskorting. Unlike the general credit, which is strictly income-based, the labour credit also checks that you're actively working. For freelancers, this means:

• You must meet the 1,225-hour criterion (or the lighter 800-hour criterion if you're disabled)
• Your business must genuinely be your primary occupation
• Income from other sources (box 2, box 3) doesn't affect your eligibility, only your box 1 profit matters

If you're below the hour threshold, you lose the labour credit entirely.

How both credits stack and phase out#

When you file your tax return, both credits are applied simultaneously. Here's how they interact:

• Calculate your taxable profit in box 1 (revenue minus business costs minus entrepreneur deductions)
• The Belastingdienst calculates your preliminary tax on that profit
• The algemene heffingskorting is applied (you lose it euro-for-euro above the €20,000 threshold)
• The arbeidskorting is applied separately (you lose it euro-for-euro above the €10,000 threshold)
• Your final tax bill = preliminary tax minus both credits

Because the labour credit phases out at a lower threshold (€10,000) than the general credit (€20,000), most higher-earning freelancers lose their labour credit first.

Worked example#

Let's say you earn €30,000 taxable profit in 2025:

• Preliminary tax on €30,000 (assuming roughly 37% at that bracket): ~€11,100
• Algemene heffingskorting: You're €10,000 above the €20,000 threshold. The credit reduces by roughly €10,000 × 2 = €20,000, leaving you with roughly €0 general credit (you've phased out completely)
• Arbeidskorting: You're €20,000 above the €10,000 threshold, so this has also phased out to nearly zero
• Final tax: ~€11,100 (both credits gone)

Contrast this with €15,000 profit:

• Preliminary tax on €15,000: ~€5,550
• Algemene heffingskorting: You're below the €20,000 threshold, so you get the full ~€2,000 credit
• Arbeidskorting: You're €5,000 above the €10,000 threshold, so you receive roughly €450–€550 of the max €900 credit
• Final tax: ~€5,550 − €2,000 − €500 = ~€3,050

Notice: at a higher profit, you lose the credits and pay much more tax. This is why planning your income matters.

Why a salaried job may already use up your credits#

If you work as an employee and freelance on the side, here's the critical issue: your employer may have already claimed your credits against your salary.

How employer payroll works#

When you're employed, your employer withholds income tax each month. The Belastingdienst instructs them to apply the algemene heffingskorting and arbeidskorting to your salary, reducing your monthly take-home. Over the year, you receive the benefit of these credits in the form of lower withholding.

The collision#

When you also file a tax return as a freelancer, the Belastingdienst compares your total box 1 income (employment + self-employment) to determine how much credit you're entitled to overall. If your combined income crosses the phase-out threshold, the credits are trimmed or eliminated.

Here's what can happen:

• Scenario 1: You earn €25,000 as an employee. Your employer has already applied the general tax credit against your salary.
• You then earn €15,000 as a freelancer. Your total box 1 income is €40,000.
• At €40,000, the general tax credit has largely phased out. The Belastingdienst recalculates your tax on the combined income.
• Result: You may owe additional tax in your annual return because your employer's application of credits was based only on your salary, not your total income.

How to claim your credits in your tax return#

The credits are automatic. You don't have to request them or check a special box; the Belastingdienst applies them based on your reported box 1 income.

However:

• If you're employed: Your employer applies them monthly. Your annual return will recalculate them based on your total income. If you end up entitled to more credit than your employer withheld, you get a refund. If you're entitled to less, you owe more tax.
• If you're self-employed only: You report your profit, and the Belastingdienst applies both credits in full (if you qualify). No additional claim needed.
• If you're both employed and freelance: File your annual return honestly with all income sources. The Belastingdienst will recalculate credits correctly.

Special case: the urencriterium and arbeidskorting#

The arbeidskorting requires that you meet the 1,225-hour rule. If you fall below this—even if you have high profit—you lose the arbeidskorting entirely. This is why freelancers who work part-time or have passive income struggles must carefully track hours.

If you claim to meet the criterion but the Belastingdienst audits your records and finds you didn't, they'll:

1. Deny you the arbeidskorting retroactively
2. Recalculate your tax
3. Charge you interest on the unpaid tax (belastingrente)
4. Possibly add a penalty if you were negligent

Keep meticulous time records if the arbeidskorting is material to your tax planning.

The link to other deductions and credits#

Remember: the heffingskortingen are credits, not deductions. They sit downstream of your box 1 tax brackets. You still benefit from:

• Business cost deductions (fully deductible before tax is even calculated)
• Entrepreneur deductions (zelfstandigenaftrek, startersaftrek, MKB exemption)
• Then the credits reduce your tax

If you're trying to minimize tax, the deductions usually do more heavy lifting. But the credits are the final cut.

Frequently asked questions#

Tax credits are one of the most valuable—and overlooked—benefits the Dutch tax system offers freelancers. The combination of the algemene heffingskorting and arbeidskorting can save you thousands, especially if you're in the €10,000–€30,000 profit band. The catch: they phase out fast, and a salaried job can complicate the picture. Understand how they interact with your income, and you'll avoid surprise bills. For detailed forecasting and automatic credit calculation, ZZP Belasting tracks your income in real time and shows you exactly what you owe—credits included.

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