Belgium's tax-free income allowance to increase from next year

Belgian prime minister Bart de Wever has announced new tax measures which could save workers several hundred euros net per year.

In its summer agreement, the De Wever government confirmed a tax reform that will continue throughout the legislative term until 2029.

The measure that will have the greatest impact on residents' net income will be the increase in the tax-free allowance. This is a portion of annual income that is not taxed at all in the tax return every Belgian tax residents fills in each year.

For income in 2025, this tax-free allowance is €10,910 and it will be raised to €15,300 in 2029, “with a first step in 2026”, which has not been specified.

At this stage, it is unclear if this tax-free allowance will be indexed beyond the announced €15,300 to take account of inflation.

Between now and 2029, the increase means that an additional €4,390 of income will be taxed at 0% instead of 25%. This measure will increase workers’ net income by €1,097.50 each year in 2029, compared to 2025, which represents a net gain of just under €100 per month.

This tax-free allowance is increased when the taxpayer or household has one or more dependent children. For the first child, the government plans to increase the tax-free allowance by €670.

Currently, the tax-free allowance for one child is €1,920, which will increase to €2,650 in 2029. For two, three and four children the amount of tax-free allowance this year (for income earned in 2024) is respectively €4,950, €11,090 and €17,940.

In time, the government wants to remove the progressive nature of the tax-free allowance for each child. This means for example the allowance for two children is about 2.5 times instead as twice as much as that for one child. In other words, the aim is for each child's allowance to be the same, regardless of the size of family.

The new measures will also mean that people on low incomes will pay reduced social security payments. The government said that this would encourage more people to work as well as more employers to take on additional staff.

In theory, this measure also affects jobseekers, but they will be penalised by another reform: the end of the tax advantage on their unemployment income. This means ultimately they may not gain much from the two reforms.