More take-home pay for those who work and start businesses

We’ve reached an important agreement with the federal government on tax reform. Despite limited budgetary room, we made a clear choice: those who work or run a business should be able to keep more of what they earn.

This reform delivers on a key part of the coalition agreement.

The tax reform will come into effect on January 1, 2026, and will be phased in over the course of the legislative term, running through to 2029. The timeline has been set in stone, providing clarity and certainty for all parties involved.

Key measures of the agreement in more detail:

• The tax-free allowance will increase from €10,910 to €15,300 by 2029, with the first step implemented in 2026. As a result, all workers—especially those earning low to average wages—will see a higher net income.
• The special Social security Social security is currently managed at the Federal level in Belgium. The most important pillars of Belgian social security are: sickness and invalidity insurance (NIDHI), pensions, unemployment insurance and child allowances. In addition, occupational illness, occupational accidents and annual holidays are dealt with at this level. Some Flemish parties have been campaigning for years for (large parts of) social security to be transferred to the Regions and Communities. social security contribution, a temporary crisis measure introduced in 1994 by former Prime Minister Jean-Luc Dehaene, will be reformed and reduced. This particularly benefits single earners, who will gain up to €365 more per year in net income.
• The work Bonus Career break for the calculation of, specifically, civil servant’s pension. In order to obtain the annual pension amount in the public sector, the reference salary is multiplied by the number of employment years. That result is then multiplied by the 1/60 career break, the so-called bonus. An advantageous break applies for certain employees, so that they can reach the maximum pension more quickly. bonus for the lowest income earners will be significantly increased. By 2029, minimum wage workers will effectively take home nearly their full gross salary.
• Family taxation will be overhauled to strengthen the purchasing power of working families. The tax allowance for a first dependent child will rise substantially from €1,980 today to €2,650 in 2029—an increase of 33%. In the longer term, the goal is to equalize the amount per child.
• Anyone who wants to earn extra income should be able to do so easily and under favorable conditions. A structural reform of overtime will be introduced, with a general scheme of 180 tax-friendly overtime hours. This includes a reduction in employer contributions and a tax cut for the employee.
• Retirees who continue working after reaching retirement age will be rewarded. Instead of being taxed at progressive rates of up to 50%, their additional income will be taxed at a maximum rate of 33%.
• A “Vinted exemption” will be introduced for casual online sales—such as selling used children's clothing. Up to €2,000 per year will be exempt from the 33% tax that could otherwise apply.
• Self-employed individuals without a company structure will receive additional support. They will benefit from a new entrepreneur deduction of €650, increasing to €900 by 2029. This comes on top of a previously decided doubling of the self-employed tax credit from €3,750 to €7,500.
• The penalty for insufficient tax prepayments will be scrapped. This gives self-employed workers more flexibility to manage their cash flow and expand investment capacity.
• In line with the coalition agreement, copyright income will once again become possible for the IT sector.

Altogether, this reform package amounts to €4.4 billion in purchasing power improvements—at full scale by 2029—for everyone who works or runs a business. It forms part of the government's ambitious activation policy.

In addition, the package includes nearly €400 million in offsetting measures. These mainly involve fiscal adjustments designed to promote employment and, in the long term, simplify the tax system.

To discourage the trend of turning sole proprietorships into companies, several measures will be taken:

• The minimum salary for company directors will rise from €45,000 to €50,000. This amount had not been indexed since 2018, but will be indexed going forward.
• A second measure to discourage excessive incorporation is the so-called “20 percent rule.” When more than 20% of a salary consists of lump-sum fringe benefits—such as cars, phones, or in some cases housing or a nanny—the government will apply a separate 7.5% tax on the excess portion starting in 2026. For company directors, the consequence will be the loss of the reduced corporate tax rate.
• The marital quotient will be gradually phased out. Among all EU countries, Belgium provides the strongest financial disincentive for second earners in households. Simply put, the current system makes it more profitable for one partner not to work. By 2029, the tax advantage for non-retired households will be cut in half. For pensioners, a very gradual phase-out over 20 years is planned. The aim is to boost the incentive to work.
• The tax credit on unemployment benefits will be abolished over time. In addition, social welfare benefits will be counted as taxable income. This ensures that all income received by taxpayers is taken into account.

“Our country’s budgetary situation leaves little room for maneuver. Even so, we are making a deliberate and fair choice in favor of those who work and those who undertake. Activation is the key lever we need to get our public finances back on track. Those who work contribute—that’s what drives our economy forward. Moreover, work remains the best protection against poverty. That’s why this tax reform increases the difference between working and not working. We’re making sure that everyone who works or starts a business will take home more. Especially those on lower incomes and single earners. And those who work overtime or continue working after retirement will be rewarded,” said Finance Minister Jan Jambon.