Update on newly adopted Belgian personal income tax reform

On 10 July 2026, the Belgian Chamber approved a draft law introducing a number of personal income tax measures. While the reform remains relatively limited in scope, it is primarily aimed at increasing employees’ net take-home pay and reducing the gap between gross and net remuneration.

On the other hand, single-income households (married couples and legal cohabitants) will gradually lose part of the tax benefit provided by the marital quotient. This change aims to encourage a higher labor market participation rate by making employment more attractive for the non-working partner.

Below is a summary of the main changes that will have an impact on payroll withholding taxes and points of attention regarding your current reward packages.
 

Employees and working Individuals

• The tax-free amount will gradually increase from EUR 10.910 to EUR 15.600 by income year 2030 / tax year 2031.
• Harmonization of the tax-free allowance for dependent children. As of tax year 2027 the supplement for the first and second child will be gradually increased and should be aligned by tax year 2030. The supplement for single parents will be more strictly reserved for genuinely single parents and no longer for factually cohabitating parents.
• As of tax year 2027, there will be a minimum refundable tax credit when the child-related increase of the tax-free allowance cannot be fully utilized because the taxpayer has little or no tax liability.
• The marital quotient will be gradually reduced. For non-retired individuals, the benefit will be halved by tax year 2030. For retired individuals aged 66 and above, a 20-year phase-out will apply. Also, as from tax year 2027, the maximum amount will no longer be indexed.
• The fiscal work bonus will be strengthened in tax year 2027 and in tax year 2029, allowing low-wage employees to retain more net pay.
• The special social security contribution will be calculated individually from tax year 2029 onwards. The maximum annual contribution will be reduced from EUR 731,28 to EUR 365,64 per person.
• Lump-sum valued benefits in kind, such as a company car or housing benefits, may not exceed 20% of the total remuneration. If the threshold is exceeded for an employee, the excessive part will be subject to an employer contribution of 7.5%. This measure is applicable as of tax year 2027.
   

(Management) companies and company directors

• For company directors, lump-sum valued benefits in kind may not exceed 20% of the total remuneration. If the threshold is exceeded, the company may lose access to the reduced corporate income tax rate of 20% on the first EUR 100.000 of taxable profit.
• (management) companies wishing to benefit from the reduced corporate income tax rate will need to grant at least one company director a minimum remuneration of EUR 50.000.
   

IT professionals and copyright income

• Software developers and other IT professionals may, subject to conditions, again benefit from the copyright regime, under which qualifying copyright income is taxed at a fixed rate of 15%.
• However, IT professionals will not be able to apply the former lump-sum cost deduction, which is reserved for those with an artwork attestation.
   

Self-employed individuals

• A new entrepreneur deduction will be introduced for self-employed individuals with a sole proprietorship (éénmanszaak / entreprise individuelle). They will be able to reduce taxable profits by 10%, capped at EUR 620 from tax year 2028 and EUR 830 from tax year 2030.
• The obligation for self-employed individuals to make advance tax payments will disappear from income year 2026. Voluntary advance payments will remain possible and may still generate tax benefits.
• A fifth advance payment period will be introduced, running from 21 December to 20 February. Company directors will remain required to make advance payments for income on which no wage withholding tax is withheld.
   

Retired individuals/ unemployed individuals

• Tax reductions for pensions and replacement income will be reduced or adjusted, limiting the benefit of the higher tax-free amount for individuals who are not working.
• For retired individuals who continue to work (excluding flexi-jobs), a fixed tax rate of 33% will apply to additional employment income, without a cap on the amount that may be earned. The regime applies to employee income, not to self-employed income.
   

Other individual tax measures

• Occasional sales through platforms such as Vinted or 2dehands remain tax-free up to EUR 2.000 per year (indexed amount for income year 2027), provided they fall within the normal management of private wealth (de minimis rule).
• From tax year 2029, a correction factor will apply to the calculation base of municipal surcharges, to limit the loss of municipal tax revenue resulting from the federal personal income tax reduction.
• The tax deduction for capitalized alimony payments will also be gradually reduced from 80% to 50%. The same percentages will apply to the taxation on the side of the recipient.
   

Why does this matter for you?

This reform is not only relevant for individual taxpayers. It may also affect:

• payroll withholding and net salary calculations;
• benefits in kind and flexible reward packages;
• optimization of remuneration for IT professionals;
• tax equalization and hypothetical tax calculations for internationally mobile employees should be revised
• employee communication around phased net pay changes.
   

EY observation

Several measures already require attention from income year 2026, while others will be phased in over the coming years. Employers should align payroll, HR, reward, finance and mobility teams to assess the operational, tax and employee communication impact in time.