With the start of the new year, the rules for calculating withholding tax are changing again. As every year, 'Annex III' was published in the Belgian Official Gazette, which sets out the rules and indexation for income year 2025. This article provides an overview of the most important changes and what they mean for employees and employers.
Indexation of tax rates
The annual indexation of tax rates and scales has been implemented again. This means that a larger part of the gross salary falls under a lower tax scale, resulting in a higher net salary for many employees. This adjustment ensures that employees keep a little more of their gross salary, which has a positive effect on purchasing power.
Tax work bonus: An incentive for lower wages
The work bonus is designed to offer lower-wage workers a higher net salary by reducing their social security contributions. For 2025, the upper limit of the tax work bonus will be increased again to 765 euros (previously 710 euros). This adjustment will have a positive impact mainly on lower-income workers in the private or public sector, where the normal social security contribution of 13.07% applies.
The fiscal work bonus compensates for the effect of the increased social security contributions on the taxable salary. The percentages were already increased in 2024, but will remain valid in 2025:
33.14% of the social work bonus (part A) for low wages.
52.54% of the social work bonus (part B) for very low wages.
Impact on employees
The changes for 2025 are positive for employees. The indexation of tax rates and the increased upper limit of the fiscal work bonus ensure that lower incomes will again receive a higher net salary. For employees in higher pay scales, the exact impact depends on the extent to which their gross salary increases.
Impact on employers
It is important for employers to stay up-to-date with these changes. They must ensure correct wage calculations and possibly adjust their budget planning. Tools and software that automatically take into account the new calculation rules are essential.
Conclusion
As of 1 January 2025, the changes in the withholding tax and the fiscal work bonus will ensure that many employees will have more left over. This contributes to the purchasing power of lower incomes and stability for other pay scales. Employers would do well to follow these changes closely and apply them correctly in their payroll administration.
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