People with low incomes will receive up to hundreds of euros more holiday pay this year | Economy

The vast majority of employees in our country will receive holiday pay next month. For people with an average income or higher, the amount is lower or equal to last year. The holiday pay is usually 8 percent of the annual gross salary.

Employees who earn just below average, around 3,000 euros gross per month, receive a net 242 euros more holiday pay. A part-time employee who receives 1,750 euros gross per month will receive an extra 578 euros compared to last year, according to calculations by HR and payroll service provider ADP Netherlands.

People with an average income (3,395 gross euros per month) receive a net 19 euros less than last year. If you earn three times the average amount (10,185 euros gross per month), the net holiday pay is 637 euros lower.

“Higher incomes pay more tax on their holiday pay,” says Dik van Leeuwerden of ADP Netherlands. “This has to do, among other things, with the phasing out of the earned income tax credit.”

If you work or receive benefits, you pay tax on your income. The payroll tax credit ensures that you pay less tax on your income.

The striking differences in the amount of holiday pay arise from the settlement percentage on the standard tax rate. This percentage must ensure that the tax credits are calculated correctly.

Every year the limits at which the increase and decrease of tax credits begin are shifted. This affects the amount of payroll tax that is withheld from the holiday pay.

The introduction of the statutory minimum hourly wage also affects the amount of holiday pay. An employee with the minimum wage based on a 36-hour working week receives 15 euros less holiday pay compared to last year.

People who earn the minimum wage with a 38-hour or 40-hour working week receive a net amount of 12 and 40 euros more, respectively. The main reason is that the introduction of a statutory minimum hourly wage also means that more holiday pay is accrued for a 38-hour and 40-hour working week.

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