Why is having a baby in 2024 more profitable than in 2025?

Having a baby in 2024 and 2025 are “two big differences” for the family budget. The reason lies in the abolition of the combined tax credit for working parents of children under 12 years old (Inkomensafhankelijke Combinatiekorting, IACK). Based on the fact that the maximum discount is 2534 euros, a difference of about 30.000 euros can accumulate over twelve years.

What is a combined tax credit (IACK)?

Tells it simply and clearly Svetlana Koshek, director and founder of Nalog.nl, in his webinar "Income tax in the Netherlands": https://www.youtube.com/watch?v=wmhEOGYo_K0&t=6s. In short, we are talking about a tax rebate that accrues:

1. if there is a child or children under 12 years of age;
2. when the parent/parents work;
3. to a single parent or to one of the partners who earns less.

If the parent does not work (does not earn), then the discount, accordingly, has nothing to apply to. The amount of the Inkomensafhankelijke Combinatiekorting depends on income, the maximum amount can be 2534 euros.

Cancel discount

Analyzing the changes in legislation and taxation that were announced for Prince's Day, we wrote about the government's plans to phase out the IACK. However, it now seems more likely that the discount will be completely eliminated from January 1, 2025, abruptly and without any transition periods.

Reaction in Parliament

Many in Parliament do not agree with this, because in twelve years the difference for the budget of families with children born in 2024 and 2025 could be €30.000. And that is not all. Anyone having a child before July 1, 2024 will be eligible for the discount for the entire year, but if after this date, then only in the next tax year. This can save another 2500 euros for the state budget in each case.

The rough edges could be softened by phasing out the IACK scheme so that the tax advantage of some families over others is gradually reduced. For example, MP Pieter Omtzigt calls for this. But such a solution costs money, because the elimination of the tax credit saves the government 1,7 billion euros a year. The vote is likely to take place soon. We will look forward to!