Belgium is implementing a multi-year tax reform, with the latest measures included in the Law of 15 July 2026, published in the official gazette on 29 July. The reform primarily targets individuals by lowering employment tax burdens, increasing tax-free thresholds and adjusting incentives. However, some provisions also affect companies.
The over-arching goals are to make work more attractive, simplify parts of the tax system and phase out certain long-standing tax advantages. The changes will affect employees, families, pensioners, self-employed individuals and businesses, with some measures already in effect and others becoming effective over the coming years.
Key Changes
Measures Affecting Individuals
Measures Affecting Companies
Rewarding Work Through Higher Net Pay
One of the key elements of the reform is to reduce the tax burden on employment, which is addressed by gradually increasing the basic tax-free allowance starting in assessment year 2027. By assessment year 2031, that indexed amount is expected to reach EUR 15,600, up from EUR 11,550 today.
The reform also simplifies how the tax benefit associated with the tax-free allowance is calculated as from assessment year 2030, which should generally result in a lower personal income tax burden, although the exact impact will depend on individual circumstances.
The reform makes the tax treatment of overtime more favourable in certain circumstances. From 1 April 2026, remuneration relating to up to 240 voluntary overtime hours (or 360 in specific sectors) may qualify for a tax exemption when no overtime premium is paid. For overtime paid with an overtime premium, the maximum number of hours eligible for the tax reduction permanently increases from 130 to 180 hours retroactively as from 1 January 2026.
Finally, the tax work bonus for lower-income employees is increased.
Changes to Family-Related Tax Benefits
The reform makes significant changes to the tax treatment of families.
The tax allowance for dependent children will increase, with particular emphasis on the first two children. The aim is to align the allowances gradually, so that the tax-free allowance granted for the first and second child will be fully aligned by assessment year 2030.
Eligibility rules for the additional tax-free allowance for single parents will become more restrictive. Criteria for determining whether a child remains a dependent will also be updated—especially relevant for families with children earning employment or student income.
One of the more significant changes concerns the marriage quotient, which will be phased out. Currently, 30% of the professional income of the higher-income spouse can be allocated to the lower-income spouse if certain conditions are fulfilled. This can reduce the couple's overall tax burden because the allocated portion of the income will be taxed at the lower progressive rates rather than at the rate that would apply to the higher-income spouse. The timing of the phase-out is as follows:
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Taxpayers aged 66+ (67+ from assessment year 2031) benefit from a gradual phase-out over nearly 20 years, with the transferable percentage remaining at 30%, while the maximum amount is progressively reduced. From assessment year 2046, the marriage quotient will be eliminated.
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For other taxpayers, the maximum transferable amount will be halved over four years, after which the reduced ceiling will remain in place beyond assessment year 2045.
Additional Measures Affecting Individuals
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Unemployment benefits: The tax reduction for unemployment benefits will be phased out from income year 2026 and ultimately abolished.
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Pensions: The tax reduction will be restricted for higher-income taxpayers.
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Working pensioners: As from income year 2027, pensioners who continue working as employees after reaching the statutory retirement age (excluding self-employed individuals and company directors) will be taxed at a separate rate of 33% on their employment income.
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Special social security contribution: From income year 2028, the special social security contribution will be calculated on an individual basis rather than on a household basis, with adjusted rates and a gradual reduction of the maximum contribution.
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De minimis rule: For assessment year 2027, income up to EUR 2,000 derived from the normal management of private assets (e.g., sales via online platforms) will be presumed to fall within that category.
Measures Affecting Self-Employed Individuals
Beginning in assessment year 2027, mandatory advance payments of personal income tax by self-employed individuals will be abolished, although voluntary advance payments will continue to generate tax benefits. A new fifth advance payment period will run from 21 December to 20 February.
Company directors will remain subject to the advance-payment mechanism unless payroll withholding covers their tax liability.
Measures Affecting Companies
Cap on Benefits in Kind
To limit the use of alternative reward schemes that replace cash remuneration with more favourably taxed benefits in kind (e.g., company cars, housing, stock options), a cap will apply from assessment year 2027. Benefits in kind may not exceed 20% of an employee’s or company director’s total remuneration. If the benefits exceed the threshold:
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Company directors: The company will no longer qualify for the reduced 20% corporate tax rate.
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Employees: The excess amount will subject to a separate tax of 7.5%, payable by the company.
Copyright Tax Regime Reopened to the IT Sector
A notable measure concerns the favourable tax regime for copyright income. As from 1 January 2026, copyright income related to software can again qualify for the regime, subject to the fulfillment of certain conditions. This reverses the exclusion introduced in 2023 and will be relevant for software companies and IT consultants in particular.
Conclusion
The reform represents a significant restructuring of Belgium’s personal income tax framework. While many individuals may benefit from measures aimed at increasing net pay and incentivizing employment, the gradual reduction of certain tax advantages will require careful assessment. Employers, management companies, company directors and self-employed individuals should review compensation and benefits structures, especially where benefits in kind represent a significant part of total remuneration or director compensation.
Organisations operating tax equalization or tax protection programmes should evaluate the impact on their total assignment costs.
Charlotte Lemahieu
BDO in Belgium