For the levy of income tax in the Netherlands, a special tax deduction is allowed for certain expenses relating to the personal situation of the taxpayer. 

The income in Box 1 (income from employment and main residence) can be reduced with certain personal allowances (“persoonsgebonden aftrek”), but no further than to nil. Any remaining amount may first be offset against Box 3 income (income from savings and investment) and after that, against Box 2 income (income from substantial shareholdings).

The amount of the personal allowance equals the aggregate amount of personal deductions of the running year, and the (officially recognized) non-utilized amount of the personal deductions of previous years.  

The personal deductions include certain: 

1. expenses for maintenance obligations (in Dutch: “Onderhoudsverplichtingen”);
2. expenses of specific costs of care;
3. weekend expenses for disabled persons;
4. expenses for education;
5. expenses for listed monumental buildings;
6. deductible gifts.

The amount of these expenses must be reduced with reimbursements/compensations received for these expenses.

If in a certain year the amount of the personal deductions cannot be fully utilized because there is no sufficient positive income, the non-utilized amount can be carried forward to next years. The amount must be confirmed in a Decree from the tax office. 

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