On Prinsjesdag you will be overwhelmed by numbers and that makes it difficult to keep an overview. Therefore, read here what you will notice about the cabinet plans next year.
Not all changes mentioned in this article are final. Some of the proposals still have to be voted on.
- Purchasing power is increasing for most households. On average it will be an increase of 2.1 percent in 2020. The average income (a gross annual salary between 35,000 and 75,000 euros) is 1.8 to 2.4 percent higher. High incomes (from € 75,000) see an increase of 2.3 percent. The purchasing power of low-income households increases the least with 1.4 percent.
- Initially, the number of tax brackets would only go from four to two in 2021, but the introduction is brought forward to 2020. Now there are still the three rates 36.65 percent, 38.1 percent and 51.75 percent for four different brackets. In 2020 there are still two rates left: 37.35 percent for income up to and including 68,507 euros and 49.5 percent for everything above that. This adjustment makes it less important whether one or two people earn a household's income.
- The general tax credit goes up and this is advantageous for people with an annual income of up to 68,507 euros. It is an extra increase on top of the step-by-step increase that has already been started this year. The general tax credit is a discount on income tax and national insurance contributions. The lower the income, the greater the discount.
- Starting next year, the tax-free allowance for volunteers will rise with inflation. Depending on inflation, the maximum can rise in steps of 100 euros or remain the same. This year the tax-free reimbursement was a maximum of 1,700 euros. This amount will probably only rise to 1,800 euros in 2021.
82What exactly do those purchasing power plates mean?
- The self- employed deduction for self-employed persons is being cut back. Until now, independent entrepreneurs did not have to pay tax on the first 7,280 euros profit, but that exemption is gradually reduced in 5 years to 5,000 euros in 2028. In 2020, 250 euros will be deducted from the deductible item.
- A minimum rate of 16 euros per hour will apply to self-employed persons without employees. This will start in 2021.
- To compensate for the reduction in the self-employed person's allowance, the employed person's tax credit will rise in 2020, 2021 and 2022. This benefit also applies to all workers and ensures that labor costs are reduced. This is advantageous for people with an annual income between 10,000 and 98,000 euros. It also becomes more attractive for working people with an income of between 20,000 and 35,000 euros to work more because they have more left over from the extra income.
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- From July 1, 2020, the leave of partners in the first half year after birth is extended by five weeks. During that period, the wage will be paid for 70 percent. The five weeks are in addition to the five days of leave that full-time employees have been receiving since the beginning of this year.
- More parents are eligible for a child-related budget in 2020. About 294,000 parents are eligible for this contribution for the costs of children up to the age of eighteen. On average they receive 610 euros per year. Parents with a median income will receive 990 euros extra child-related budget next year.
- The average health insurance premium is expected to rise by around 37 euros in 2020. This amounts to an expected premium of 118.50 euros per month and a total of 1,422 euros. Incidentally, this is only an estimate by the government, because health insurers determine the level of health insurance premiums themselves. They will be announced no later than 12 November.
- The health care allowance will also rise faster than the premiums in 2020 to improve the purchasing power of, in particular, lower incomes. For single people, the supplement increases by 67 euros and for multi-person households by 95 euros.
- From next year, elderly and chronically ill people will spend a maximum of 19 euros a month on a meal service, transport pass or shopping service. This contribution for general provisions from the Social Support Act (Wmo) is currently still dependent on income.
- From January 2020 the excise tax on cigarettes and other tobacco products will increase. For a pack of twenty cigarettes, a smoker pays 0.14 euros more in excise duty. In April, the excise tax for such a package increases by 1 euro.
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- The government is looking into an adjustment of the transfer tax . Starters in the housing market may pay a lower percentage of the purchase value in transfer tax. It is still being considered whether these measures are "feasible, effective and proportional".
- To tackle the housing shortage, a building fund of 1 billion euros will be created for municipalities. For example, the target of 75,000 new homes per year must be achievable. Corporations that build social and medium-sized housing units receive a discount on the landlord's tax. This is a reduction of a total of 1 billion euros. Until now, the levy amounted to 1.7 billion euros.
- Households with an annual consumption of 1,179 cubic meters of gas and 2,525 kWh of electricity will spend about 100 euros less on energy tax next year than in 2019. Consumers will pay more tax for natural gas, but less for electricity. The tax on gas increases by 0.0399 euros per cubic meter (the rate is now 0.2931 euros). Electricity costs 0.0009 euros less per kWh next year (the rate is now 0.0986 euros). In 2020, 435.68 euros per connection will also be deducted from the energy tax. This year it was 257.54 euros.
- There will be a heat fund to stimulate energy-saving measures for owner-occupied homes.
- There may be a self- occupancy obligation for buyers of homes in Amsterdam, Rotterdam, The Hague, Utrecht and Maastricht - where the housing market is the tightest. By forcing buyers to move into a home themselves, investors and pawnbrokers would be discouraged. Minister Kajsa Ollongren will inform the House at the end of 2019 how this plan will be worked out.
- A higher income limit may apply for multi-person households who want to rent a social rental home . The government wants to raise the limit from 38,035 to 42,000 euros. For single-person households, the limit may be lowered to 35,000 euros.
- Housing associations are also given more room for customization . For example, lower middle incomes can still get a social rental home or tenants with a higher income can receive an additional rent increase of 50 to 100 euros.
See also: Nibud: Non-working people see purchasing power barely rising in 2020
- People who also use a company electric car for private purposes will pay more tax on it. This addition increases in 2020 from 4 to 8 percent of the list price of the car. A rate of 22 percent applies to everything above EUR 45,000. Now that limit is still at 50,000 euros.
- Just like this year, you do not have to pay motor vehicle tax (mrb) for electric cars in 2020 either. This will remain so until 2024. In 2025 you will pay a quarter of the mrb and from 2026 the full amount. For plug-in hybrids you will continue to pay half of the mrb up to and including 2024. In 2025 the discount is still 25 percent and from 2026 the entire amount must be paid.
- Until 2024, consumers do not pay a purchase tax (bpm) for electric cars. In 2025 this is a one-off amount of 360 euros.
- From 2021, 0.01 euro more excise duty must be paid per liter of diesel . Two years later, another 0.01 euro increase.
- The cabinet wants to introduce a lease bicycle scheme in January 2020 to make it more attractive for commuters to lease a more expensive bicycle.
Study and digital publications
- Also in 2020, students pay only half of the tuition fees for their first academic year. The teacher training even has a discount for the first two academic years.
- The VAT rate for e-books, digital newspapers and digital magazines is reduced from 21 to 9 percent. This VAT rate also applies to paper newspapers, magazines and books.
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