The first paycheck of 2023

The end of January is the time when most employees will receive their first paycheque of 2023. Whereas back in November we wrote about the many challenges facing employees and employers, this blog has a more positive tone for employees. This is because as of 1 January, a number of positive changes have been implemented, which will be visible on that first pay slip at the end of this month. We take you through the most important changes in a nutshell. That way, you can provide employees within your organisation with the right information.

Increase in net salary
The government indicated during Budget Day 2022 that it wants to make work more rewarding. To achieve this, employees will pay less tax on their income in 2023. The rate of the 1st income tax bracket (incomes up to €73,071 per year) has been reduced from 37.07% to 36.93%. On a net basis, employees will thus benefit by up to €102 per year (1) . In addition, from 1 January 2023, the employment tax credit will go up extra annually. This is positive for employees and entrepreneurs with an income of up to €115,301 per year. The amount of this labour discount depends on age and income level. As of 2023, the benefit for employees can amount to €500 net per year (2).

Minimum wage
High inflation has the greatest impact on people with lower or middle incomes. To give these people more financial options, the government has decided to implement an additional increase in the minimum wage for the first time since 1969. As of 1 January 2023, the minimum wage has increased by 10.15%. This means that for a 36-hour working week, a person will receive at least €12.40 gross per hour. For a 40-hour working week, this gross hourly wage is lower. From 1 January 2024, this statutory minimum wage will become a statutory minimum hourly wage so that this distinction based on the number of hours a person works per week will no longer be made. The increase of the minimum wage has the consequence that the benefits linked to the wage (Wajong, social assistance) also automatically increase. Benefit recipients and pensioners also benefit from this increase (3).

Travel and home office allowance
Higher petrol and public transport prices are driving up travel costs. The government has therefore decided to raise the tax-free travel allowance from €0.19 to €0.21 per kilometre from 1 January 2023. From 1 January 2024, this will be further increased to €0.22 per kilometre. When employees travel by public transport, the employer may also reimburse the full amount tax-free. However, increasing the travel allowance is not mandatory (4).

Inflation not only increases travel costs but also makes it more expensive to work from home. The tax-free home working allowance has therefore been raised from €2.00 to €2.15 from 1 January 2023 (5).

Organisation-specific changes
Above, we have only described the changes that apply to each organisation. You may additionally have implemented organisation-specific changes such as a collective salary increase or an inflation supplement. Or maybe the annual salary increases have just been implemented? That's a nice cherry on top! And a good start to the new year.