All employees in Belgium will receive a minimum of €600 per year more in net wages from January 2023 – as a result of an adjustment that is being made to the tax scales and a change in the calculation of withholding tax on wages.
While Tuesday marked a day of receiving gifts for children, adults are the lucky ones on Wednesday, as tax authorities announced the key formula for the new tax brackets, which will come into effect on 1 January 2023. The new changes will see net monthly wages rise by a minimum of €600 per year (around €50/month) for all Belgian employees, both in the private and public sectors.
"The past year has seen very high inflation. This translates into not only an automatic wage indexation per sector but also a higher indexation of tax rates, as a result of which a larger part of your wage ends up in a lower tax bracket, resulting in a higher net wage," said Kristiaan Andries, advisor of SD Worx's Knowledge Centre.
By comparison, two years ago this was an average of only €5 per month or €60 per year. "Last year, it was about one-third or €240 a year. This increase is on top of the increase due to the automatic wage indexation of the sectors," Andries noted.
Calculation of changes
Belgium's system works with progressive tax brackets, meaning an employee's total income is added together at the end of the year and is then split into brackets or so-called "tranches," which each have their own tax rate, ranging from 25% to 50% for an amount over €41,360.
SD Worx's calculations were based on gross monthly wages of €2,000, €2,750, €3,750 and €4,500 and their family situation, as the amount of money a person receives after tax also depends on this.
For example, the changes will see an unmarried civil servant with no dependants who earns a wage of €2,000 receive a net amount of €1,840 per month, up from €1,790 last year. A married worker with two children whose spouse has no own income on a gross salary of €4,500 will earn €3,262 after taxes, almost €140 per month more than last year.
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The tax rates themselves are, as is the case with wages in Belgium, indexed every year. "If not, this would result in an unmitigated increase in tax and an erosion of purchasing power," SD Worx explained.
On 1 January, many sectors (blue-collar and white-collar workers in the food industry, administrative white-collar workers and blue-collar workers in road transport and logistics for third parties) will also see their wages indexed, which will further add to people's net income.