AOW pension

Tax and national insurance contributions and tax credits

We deduct tax and national insurance contributions from your AOW pension. You do not have to pay tax and national insurance contributions on your entire income. You can apply for a tax credit, which is a reduction in the amount of tax and national insurance contributions you have to pay. There are several tax credits.

Which tax credits can be applied to your AOW pension?

The applicable tax credits depend on your personal situation. Three tax credits can be applied to an AOW pension:

1. General tax credit

Everyone is entitled to the general tax credit. If your taxable income is less than €20,384, the general tax credit will be €1,268. If your income is €20,384 or more, the amount of the general tax credit will depend on your income.

2. Elderly person's tax credit

As from 1 January 2019, the elderly person's tax credit will be income-related. If your aggregate income is less than €36,783, you will get the full elderly person's tax credit of €1,596. If your income is above this level, the tax credit is reduced in steps of 15%. The higher your income, the more your tax credit is reduced. We never apply a reduction to the elderly person's tax credit because an AOW pension is always less than €36,783.

Your aggregate income is the total of your income and deductible items in the three income tax boxes, not including deductions for losses over previous years.

Example 1: you will reach your AOW pension age in 2019 and your aggregate income is €25.000. Your elderly person's tax credit will be €1,596.

Example 2: you will reach your AOW pension age in 2019 and your aggregate income is €40.000. The elderly person's tax credit is reduced by 15% x (€40.000 - €36,783) = €482. The amount of your elderly person's tax credit will be €1.114 (€1,596 - €482).

3. Single elderly person's tax credit

If you receive an AOW pension for a person living alone, you will get the single elderly person's tax credit of €429.