Many taxpayers in Belgium are unsure how income tax is calculated and, more importantly, what the tax-exempt portion really means.
This article aims to clarify:
How the progressive tax system works
What the tax-exempt portion is and how it operates as a tax reduction
How personal and family situations influence that portion
How to compute net tax including municipal surcharges
1. Progressive federal tax brackets
Belgium applies a progressive income tax system, meaning that different portions of income are taxed at different rates.
You can always consult the official and updated rates on the SPF Finance website.
📊 Belgian tax brackets (2024–2025)
Brackets | Rate | 2024 Income | 2025 Income |
Bracket 1 | 25% | €0 – €15,820 | €0 – €16,320 |
Bracket 2 | 40% | €15,820 – €27,920 | €16,320 – €28,800 |
Bracket 3 | 45% | €27,920 – €48,320 | €28,800 –€49,840 |
Bracket 4 | 50% | > €48,320 | > €49,840 |
💡 Important: Only the portion of your income that falls within each bracket is taxed at that rate.
1.1 Note for complementary self-employed individuals
a. General principle
If you have a complementary self-employed activity (for example, you are employed full-time and run a small business on the side), the income from your side activity is added to your main income (salary, etc.) to determine your total taxable income.
This total is then taxed according to the progressive brackets.
That means:
Lower income portions are taxed at lower rates,
Higher income portions are taxed at higher rates.
Even a small additional income can push part of your total income into a higher bracket, but only the portion exceeding the threshold is taxed at that higher rate.
b. Step-by-step calculation
Determine your professional income from the complementary activity (after deducting allowable expenses).
Add this income to your other taxable sources (salary, rental income, etc.).
The sum is your total taxable income.
Apply the progressive tax rates to this total.
Your marginal tax rate (the rate on your last euro earned) might be high, but lower parts of your income still benefit from lower rates.
c. Example
Let’s imagine the following situation:
Main job: €45,000 per year (gross taxable)
Complementary self-employed income: €10,000 (after expenses)
➡️ Total taxable income = €45,000 + €10,000 = €55,000
Approximate tax calculation (2025 brackets):
Portion of income | Rate | Tax |
€0 – €16,320 | 25% | €4,080 |
€16,320 – €28,800 | 40% | €5,000 |
€28,800 – €49,840 | 45% | €9,450 |
€49,840 – €55,000 | 50% | €2,580 |
Total tax (approx.) |
| €21,110 |
Here, the €10,000 from your side activity falls entirely within the top 50% bracket.
🔹 This does not mean that your entire income is taxed at 50%.
Only the last portion above the €49,840 threshold is.
d. Key takeaway
Your complementary income increases your total taxable income, which can:
Push you into a higher bracket, and
Cause only the upper portion of your income to be taxed at the higher rate.
The progressive system ensures fairness : this means that everyone benefits from lower tax rates on the first portions of income, regardless of total earnings.
2. What is the tax-exempt portion?
The tax-exempt portion is the amount of income you don’t pay any tax on.
It’s like your personal tax-free allowance.
Only income above that amount is taxed.
It applies to:
Employees
Self-employed people
And increases with your family situation (children, dependents, etc.)
💬 Note : It’s not a “discount” on your income ; it’s a reduction of tax, based on what you would have paid on that portion of income. |
🧠 Quick glossary :
Term | Meaning |
Tax brackets | Different slices of income taxed at different rates |
Marginal tax rate | The rate on your last euro earned |
Average tax rate | Total tax divided by total income |
Tax-exempt portion | The part of income you don’t pay tax on |
Municipal surcharge | A small extra % added by your commune |
3️⃣ Let’s take an example:
Status | Single |
Dependents | 2 children |
Net taxable income | €26,000 |
Region | Wallonia (avg. local surcharge 7%) |
Year | 2025 (tax year 2026) |
Step 1 — Calculate basic federal tax
Income bracket | Rate | Tax |
€0 → €16,320 | 25% | €4,080 |
€16,320 → €26,000 | 40% | €3,872 |
Total before reductions |
| €7,952 |
How the tax-exempt portion helps :
Every taxpayer gets a basic tax-free amount.
In 2025, that’s €10,910 for everyone and it increases if you have dependents.
Tax-exempt amounts depending on different situations :
Family situation | Tax-exempt amount |
Basic taxpayer | €10,910 |
1 dependent child | €12,890 |
2 dependent children | €16,020 |
3 dependent children | €22,350 |
4 dependent children | €29,420 |
Each additional child | +€7,070 |
Single person | €12,890 |
Other dependents :
Dependent | Tax-exempt amount |
Other person | €1,980 |
Other person w/ disability | €3,960 |
Elderly (65+) in dependency | €5,950 |
In our example :
Family Situation | Amount |
Base amount | €10,910 |
+ 1 child | + €1,980 |
+ 2 children | + €5,110 |
Single parent | + €1,980 |
So in this case we would have :
€10,910 (base) + €5,110 (for 2 kids) + €1,980 (single) = € 18,000 tax-exempt portion
How is that exempt portion taxed ? :
Tax exempt amount | Rates | Tax benefit | Cumulative |
0 – 11,460 € | 25% | 2,865.00 € (1) | 2,865.00 € |
11,460 € – 16,320 € | 30% | 1,458.00 € (2) | 4,323.00 € |
16,320 € – 27,190 € | 40% | 4,348.00 € | 8,671.00 € |
27,190 € – 49,840 € | 45% | 10,192.50 € | 18,863.50 € |
> 49 840€ | 50% |
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➡️ How much taxes would that person pay on that amount of 18 000 € ?
2 865€ (1) + 1458 € (2) + 672 € (3) (40% on the remaining amount) = which brings us to a total of 4 995,00 €.
3. 🧩 How the exemption is applied
So if the taxable income is €26 000, and you’re entitled to a tax-exempt portion of €18 000.
Your taxes are not directly calculated on the difference (8 000) €.
Instead, it’s first computed on the entire €26 000.
Then, the tax corresponding to the exempt €18 000 ( so in this case we’ve calculated: 4 995€) is subtracted from that total.
Those €18 000 are always considered to fall within the lowest tax brackets (25 % and then 40 %), so the tax saving you receive is always calculated at those lower rates.
💬 The “exempt portion” therefore functions as a tax benefit, not a full income deduction. |
It protects the lowest part of income from taxation, ensuring everyone receives the same basic tax relief.
In our example, this reduction represents roughly 4 995 € of tax savings.
So the calculation would look like this : total gross tax = € 7 952 - 4 995 € (tax we would have normally paid on the tax exempt portion of 18 000€) = 2 957,00 €
👨👩👧 4. Additional family reductions
Single parents or taxpayers with dependent children also benefit from extra deductions, which further lower the total tax.
Type of benefit | Description | Approx. amount |
Single-parent reduction | Extra benefit per dependent child | ≈ €150 per child |
Total for 2 children | 2 × €150 | ≈ €300 |
🧾 5. Net federal tax
Step | Amount |
Gross federal tax | € 7 952 |
- Tax benefit for “exempt portion” | - € 4 995 |
- Family reductions | - € 300 |
= Net taxable | € 2 657 |
🏘️ 6. Municipal surcharges
On top of that amount, every commune adds a small percentage (usually 6–9 %) to obtain the final amount to pay to the authorities.
Average rate | Calculation | Amount |
7 % | € 2 657 × 7 % | € 185,99 |
✅ Final result (Income 2025)
Element | Amount |
Net federal tax | € 2 657 |
+ Municipal surcharge | + € 185,99 |
Total taxable | ≈ € 2 842,99 |
🧩 Key points
The tax-exempt income portion is a tax benefit, not a simple income deduction.
It always applies to the lowest tax brackets, so the saving is based on lower rates.
Dependent children increase this exempt portion.
Single parents receive an extra reduction.
Progressive rates + local surcharges explain why the effective rate sometimes differs from expectations.