Starter deduction 2026: conditions, amount & explanation

Introduction

The startup deduction can save startup entrepreneurs thousands of dollars in taxes. But only if you meet the conditions. Many entrepreneurs know that a scheme exists, but don't understand exactly how it works or when they are actually entitled to it.

In this article we clearly explain what the starter's deduction is, when you qualify for it, how often you can apply it and what it means for you in 2026.

What is startup deduction?

The starter deduction is an additional deduction on top of the self-employment deduction for beginning entrepreneurs. It lowers your taxable profit, so you pay less income tax.

Important to know: you do not receive this amount directly into your account. The starters deduction is deducted from your profit, after which you pay tax on the lower amount. So how much benefit you actually have depends on your profit and your tax rate.

Example

Say you have a profit of €40,000 in 2026 and are entitled to the starter deduction of €2,123. Your taxable profit is then reduced to €37,877. Because this profit falls within the first tax bracket (36.93% in 2026), this deduction gives you a tax savings of about €784.40.

The scheme is intended as temporary support in the first years of your business. You may apply the starter deduction up to three times in the first five years that you are an entrepreneur for income tax purposes.

When do you receive startup deductions?

To qualify for the start-up deduction, an entrepreneur must meet certain conditions.

Conditions self-employed deduction

You are entitled to self-employment deduction. The conditions for self-employment deduction are:

• You are an entrepreneur for income tax purposes.
• You meet the hour criterion of 1225 hours per year, spending more time on your business than other work.
• You were not an entrepreneur for the tax authorities every year for the past 5 years.
• You have used the self-employment deduction for up to 2 years in the past 5 years.
• In the calendar year or any of the past 5 years, there was no silent return from a limited liability company.

How does the starter deduction work?

If you meet these conditions, you will receive the start-up deduction a maximum of 3 times in the first 5 years that you are in business. You do not have to apply for the starter's deduction. The deduction is added to the self-employed deduction on your income tax return. You cannot choose to take the self-employment deduction but not the starter's deduction. If you suffer a tax loss due to the total of deductions, you can offset this loss in other years.

Starters deduction amounts

The amounts of the deduction for starters are as follows:

Starters Deduction and state pension age

Entrepreneurs who have reached the state pension age as of Jan. 1 are entitled to 50% of the start-up deduction.

Explanation of the hour criterion (1,225 hours)

You meet the hour criterion if you spend at least 1,225 hours on your business in a calendar year. This amounts to an average of about 24 hours per week.

Which hours count?

• Hours you spend on executive work for clients
• Acquisition and sales calls
• Marketing and maintaining your website or social media
• Administration and bookkeeping
• Travel time for business appointments
• Preparation of offers
• Study hours if directly related to your business
• Networking meetings with a business purpose

Which hours do not count?

• Private activities
• Commuting to a fixed workplace
• General training with no direct relationship to your business
• Sick hours or vacation

More time on your business than on other work

In addition to the 1,225 hours, you must spend more time on your business than on other work, such as a salaried job.

Exception: if you were not an entrepreneur in any of the previous five years, this additional requirement does not apply.

How do you prove you meet the hour criterion?

The Tax Office may ask for a timesheet. You are not required to use a specific format, but you must be able to demonstrate that you actually worked the hours.

A good timesheet includes:

• Date
• Description of work
• Number of hours worked per day

A simple spreadsheet, calendar or accounting program with time tracking is usually sufficient, as long as the overview is logical and consistent.

Conclusion

The starter deduction is a powerful tax break for budding entrepreneurs, but only if you meet the conditions. The hour criterion of 1,225 hours per year is decisive. In addition, you may apply the deduction a maximum of three times in the first five entrepreneurial years and you must have made limited use of the self-employment deduction in previous years.

Although the amount of €2,123 seems fixed, the actual tax benefit can vary depending on your profit level and personal situation. Especially with higher profits, the deduction can provide a significant net benefit.

By properly planning when to use the starters deduction and by carefully keeping your time records, you avoid surprises afterwards and make the most of the tax benefit.

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Resources

• Tax Office. (s.d.). Starter deduction. Accessed February 20, 2026, from
  https://www.belastingdienst.nl/wps/wcm/connect/nl/ondernemers/content/startersaftrek
  
• Tax Office. (s.d.). Self-employment deduction. Accessed February 20, 2026, from
  https://www.belastingdienst.nl/wps/wcm/connect/nl/ondernemers/content/zelfstandigenaftrek
  
• Tax Office. (s.d.). Hours criterion. Accessed February 20, 2026, from
  https://www.belastingdienst.nl/wps/wcm/connect/nl/ondernemers/content/urencriterium
  
• Central government. (s.d.). Income tax for entrepreneurs. Accessed February 20, 2026, from
  https://www.rijksoverheid.nl/onderwerpen/inkomstenbelasting/inkomstenbelasting-voor-ondernemers
  
• Income Tax Act 2001, art. 3.76 (Self-employment deduction and starter deduction). Consulted at
  https://wetten.overheid.nl/BWBR0011353/