What does Budget Day 2023 mean for your wallet?

Tuesday, Sept. 19, was prince(s) day again. The moment when the cabinet presents the new plans. Because we have an outgoing administration, it was mostly about plans and buzz words. But changes are actually coming. What does Budget Day 2023 mean for your wallet? We sum up the most important news for you.

What does Prince’s Day really mean?

Before we begin: why do we have a Prince’s Day in the first place? Then what happens? King Willem-Alexander delivers the Speech from the Throne on Budget Day. This is how he opens the new working year of the Senate and House of Representatives (the States General). The Speech from the Throne contains the government’s main plans for the coming year. Every year the cabinet makes plans and a corresponding budget. This budget shows how much money the government receives, and from what sources, and how much the government spends and on what. Lots of buzzwords and difficult terms come into play; we’re going to keep it as simple as possible. The major updates are as follows:

Poverty

Poverty and poverty alleviation was a major theme. Fortunately. Even in a country like the Netherlands, many people live on the poverty line. By 2023, many things have become significantly more expensive, think groceries, energy and transportation. Salaries have often not risen as fast with prices, and that caused many people to have less purchasing power or struggle to pay their bills. Purchasing power literally means “how much can you buy. The term purchasing power is a commonly used term and will come up a lot. What the government wants to do to fight poverty? The following:

Poverty Reduction

The child budget goes up. Child budget is an amount parents receive to supplement child support. For the first comes an additional €750, for second, third and more children it is a maximum of €833 per year. More families will also be eligible for this budget.
The rent allowance goes up by up to €416.
Benefits and the minimum wage are rising. How many, we could not find out at the time of writing.
The employment tax credit ( = rebate that is deducted by the Tax Administration from the income tax you have to pay. So this means that you get a discount on your taxes. Everyone who works is entitled to this discount, regardless of the amount of work income) will be €115 higher. People earning around the minimum wage will pay less tax. They keep more salary as a result.
There will be free school meals for children who could use it. Super good initiative as far as we are concerned! Please let it be healthy meals that are also tasty. Eating together = top.
People who can’t pay the energy bill get help. A special fund (Temporary Emergency Energy Fund) pays part of the energy bill for them.
People who travel for work can get more travel reimbursement. The allowance per mile will go up from 21 cents to 23 cents.

Healthcare Costs

Health insurance is getting more expensive. For the basic package you will pay an average of 149 euros per month next year. That’s 12 euros more than this year. But note that this is an estimate of the cabinet. Health insurers are allowed to set their own premiums. We will hear more about that later this year.
The rent allowance goes up, but the maximum healthcare allowance goes down next year. The care allowance had been increased to €154 per month early this year, but in 2024 the government is scaling it back to a maximum of €127.

Taxes

There are many plans to tweak our tax system a bit, especially tax in Box 3. What was presented on Budget Day 2023 is the following:

If you fall into the first tax bracket for your income tax, you’re going to pay a little bit more tax. The rate in the first bracket will be 36.97% (2023: 36.93%). The rate in the second bracket remains 49.50%. Until when are you in the first bracket? Up to a gross income of €69,339.
Do you have a lot of power? Then you are going to pay more taxes. In particular, taxation in Box 3 will change. This is because the tax-free assets (the assets on which you do not have to pay tax. This is for a single person up to €57,000 and for a couple €114,000) does not rise with inflation. In addition, the rate in Box 3 will rise from 32% to 34% next year. What does that mean? This is the percentage of tax you pay on your return on your assets. So suppose you make a 10% return on your investments, you pay 34% tax on that.

Retirement

There are many changes around retirement, which are beneficial for self-employed people and people who want to build up extra pension. The annual allowance goes up (and that means you can receive tax benefits over a larger amount) and you are allowed to supplement missed accrual over the past 10 years, instead of 7 years. Read more about that in this article on pension changes.