What is payroll tax credit, and should I apply it?

Payroll tax credit (loonheffingskorting) is a tax discount that reduces the amount of wage tax you pay, allowing you to keep more of your income. During your annual tax return, the Belastingdienst (Tax Administration) reviews your income and automatically applies the tax credit if you are entitled to it.

This credit is designed to support people with low and middle incomes. The higher your income, the smaller the credit. If you activate the payroll tax credit with your employer, it’s applied directly to your regular pay, so you don’t have to wait for your annual tax return. Read more about it on the website of the Belastingdienst.

The credit doesn’t apply to bonuses or allowances.

One employer

The payroll tax credit can only be applied to one employer at a time. So you will need to decide whether to apply it through Temper or through another employer you may have. To benefit the most right away, it’s recommended to apply the payroll tax credit to the employer where you earn the most.

How to activate the payroll tax credit at Temper

You can easily turn on the payroll tax credit at any time. Go to your profile and switch on the toggle. If you do this before Wednesday, 10 am, the change will take effect for your payment on Friday. Otherwise, from the week after.

You can also switch it off anytime, which you might want to do when you start earning more at another employer.

Haven't switched it on?

No worries! If you don’t activate it, you’re not missing out. When you file your annual income tax return next May for the previous year, you will still get back any tax you overpaid.