Dutch Budget Deal Reverses Social Security Cuts, Raises Taxes on High Incomes – What It Means for Expats

The Dutch minority cabinet (D66, VVD, CDA) has reached a last-minute budget agreement that largely reverses planned cuts to social security, postpones the increase in healthcare deductible, and allocates €1.5 billion to protect purchasing power — partly funded by a €750 million tax hike on higher incomes. The deal, finalized on 31 August and leaked on 1 September, aims to secure opposition support for Prinsjesdag (Budget Day) on the third Tuesday of September.

Finance Minister Eelko Heinen stated that the budget provides a “solid basis” for support in both the Tweede Kamer (House of Representatives) and the Eerste Kamer (Senate), despite the cabinet’s minority status. According to NOS, Premier Rob Jetten emphasized that the plans include enough concessions to opposition parties, particularly the Pro party, which could provide the necessary majority.

Social Security Cuts Scrapped

The most significant reversal is the cancellation of the €2.8 billion cut to the AOW (state pension). The government had already announced this, but it is now officially in the budget. Additionally, the planned 20 percent reduction of the daily wage (maximum benefit amount) is scaled back to 7.5 percent, costing €824 million. The proposal to halve the maximum duration for unemployment benefits (WW) from 24 to 12 months is postponed to 2029, and the abolition of the disability allowance (WIA) is delayed by a year. These postponements cost €684 million and €310 million, respectively, according to NL Times.

Healthcare Deductible Postponed

The increase in the healthcare deductible (eigen risico) will be postponed by one year. This means that in 2027, the deductible — the amount you pay out-of-pocket before insurance covers most costs — will remain at the current level. This postponement affects all residents with Dutch health insurance, including internationals, who are already grappling with rising premiums.

Tax Hike on High Incomes

To partly fund the package, the cabinet will raise taxes on higher incomes by €750 million. Exactly which income brackets are affected remains unclear, particularly regarding box 3 taxation (tax on savings and investments). NU.nl reports that the details of box 3 changes are still ambiguous, which is a key concern for expats with significant savings or investment portfolios.

What This Means for Expats and Internationals

For residents on residence permits, the budget deal offers some immediate relief:

• Purchasing power: The €1.5 billion allocation could help offset rising costs, though specifics on how this will be distributed — such as energy subsidies, housing allowances (toeslagen), or tax credits — are not yet clear.
• Healthcare costs: The postponement of the deductible increase means no added financial burden in 2027, but this is only a temporary reprieve.
• AOW: While the pension cut is reversed, internationals who have not built up full AOW rights (due to living abroad) will not directly benefit from the full reversal, but the broader social security measures may indirectly stabilize the system.
• Box 3 uncertainty: The lack of clarity on box 3 taxation is particularly relevant for expats with assets in the Netherlands. Past reforms have been controversial, and any changes could affect tax liabilities for savings, stocks, and second homes.

Coalition Arithmetic and Opposition Support

The cabinet is courting the Pro party for support, which could swing the vote in both chambers. According to NOS, the government also made concessions to right-wing opposition parties like JA21 and SGP by extending the discount on fuel excise duties for another year. However, funding gaps remain: the tax hike covers only part of the €1.5 billion package, and the cabinet will need to explain where additional cuts come from.

What’s Next?

The full budget will be presented on Prinsjesdag (17 September). Internationals should monitor official communications from the Belastingdienst (tax authority) and the Sociale Verzekeringsbank (SVB) for personal impacts. Contact your gemeente (municipality) or a tax advisor if you receive housing or healthcare allowances, as thresholds may change.

For now, the deal signals a shift away from austerity toward protecting purchasing power, but the devil – as always – lies in the details of box 3 and future healthcare costs.