Calculating your annual allowance (jaarruimte) in 2026: how much can you save with tax relief?

What is the annual allowance (jaarruimte)?

If you build up little or no pension through work, the Dutch Tax Administration (Belastingdienst) says you have a pension shortfall. To make up that shortfall yourself, you may deduct premiums for an annuity or a similar product from your income in box 1. How much you may deduct is your annual allowance. The money later supplements your state pension (AOW) and employer pension, and you only pay tax on it when it is paid out.

Two things often surprise people. This year's allowance is based on last year's situation: for 2026 the Belastingdienst looks at 2025. And people who build up a pension through their employer usually still have some room left, especially with a modest scheme or a salary above the pensionable salary.

How do you calculate your annual allowance in 2026?

The Belastingdienst uses four steps:

1. Add up your 2025 income. This is your taxable wages, your business profit (before the entrepreneur's allowance) and your income from other work. Anything above €137,800 does not count.
2. Deduct the state pension offset (AOW-franchise). It is €19,172. What remains is your contribution base (premiegrondslag), with a maximum of €118,628.
3. Take 30 percent of the contribution base.
4. Deduct 6.27 times your factor A. Factor A is your 2025 pension accrual as shown on your annual pension statement (UPO). If you build up no pension through work, your factor A is zero.

The result is your annual allowance for 2026. These are the figures the Belastingdienst uses:

Source: Belastingdienst, overview of life insurance figures as of 1 January 2026 (Article 3.127 of the Dutch Income Tax Act 2001).

How much annual allowance do I have? A worked example step by step

Take Sanne. She is an employee, earned taxable wages of €60,000 in 2025 and builds up a pension with her employer's pension fund. Her 2025 pension statement shows a factor A of €1,200.

1. Income 2025: €60,000.
2. Minus the state pension offset of €19,172 gives a contribution base of €40,828.
3. 30 percent of that is €12,248.40.
4. 6.27 times the factor A of €1,200 is €7,524.
5. Annual allowance 2026: €12,248.40 minus €7,524 is €4,724.40.

So Sanne may pay in just over €4,700 with tax relief in 2026, even though she has a pension through work. This is the same calculation for a freelancer without a pension scheme and for a director-major shareholder (DGA) who builds up no pension in his company:

Someone who earned more than €137,800 in 2025 and built up no pension reaches the maximum: 30 percent of €118,628, rounded to €35,589.

Source of figures: Belastingdienst, overview of life insurance figures as of 1 January 2026. Formula: Belastingdienst, KG:070:2024:3 on the annual allowance calculation. The incomes and factor A are examples. Check your own situation with the Belastingdienst's annuity premium tool (in Dutch).

Where do you find your factor A?

Factor A is on the uniform pension statement (UPO) that your pension fund or insurer sends every year. For the 2026 allowance you need the statement for 2025. In most schemes the amount is shown under the Factor A icon. In some schemes it is under the Jaarruimte icon; the Belastingdienst explains per type of scheme which amount to use.

If you worked for two employers in 2025, you have two statements and you include the accrual from both. If you cannot find your statement, ask the pension provider or look in their online portal. Without a factor A, you can only calculate the allowance if you built up no pension in 2025.

What is the carry-forward allowance (reserveringsruimte)?

Annual allowance you do not use does not disappear straight away. It adds up to your carry-forward allowance, which you can still use in the following ten years. In 2026 this covers unused allowance from 2016 up to and including 2025. The maximum is €42,753, for all your annuity products together.

If you have both an annual allowance and a carry-forward allowance, the Belastingdienst advises using the carry-forward allowance first. That way you use the oldest room before it expires. To calculate it you need your income details and pension accrual for the past ten years; the Belastingdienst tool works it out for you.

For people who were self-employed for a long time or worked a few years without a pension scheme, this is often the largest amount. A single payment at the end of the year can then give a sizeable deduction.

What is the deadline for paying in?

You deduct the premium in the year you pay it. If you want to use your 2026 annual or carry-forward allowance, the money must be paid in 2026. Banks and insurers often have their own cut-off date for processing around the turn of the year; check it in good time and do not wait until 31 December itself.

There is one exception. Entrepreneurs who convert their retirement reserve (oudedagsreserve) or business termination profit into an annuity have until 1 July of the following year. You may also pay annuity premiums up to five years after your state pension age. If you were born before 1 September 1953, you have no annual allowance for 2026, but you may still have a carry-forward allowance.

What does the annual allowance mean for employers?

As an employer you do not arrange the annual allowance, but your employees do bring it to HR. They ask about their factor A, want to know whether their scheme is "enough", or ask whether they can save extra through the company. A few things help you answer those questions well:

• Refer to the pension statement. Factor A is shown there, not in the payroll records. Point employees to their statement in November and to mijnpensioenoverzicht.nl for the full picture.
• Explain that an employee contribution is not deductible. If an employee contributes to the pension scheme through their salary, that contribution is already untaxed. They may not deduct it again in their tax return.
• Remember that a better scheme reduces the allowance. If you raise the contribution or the pensionable salary, factor A goes up and the room to save privately shrinks. Mention this when you communicate the change.
• Consider voluntary extra saving within the scheme. Many employees find it easier to pay in extra through their own pension scheme than to take out an annuity themselves.

Pensioenhart can explain this to your team. See employers for what that involves.

Can you save extra through your employer instead of an annuity?

Yes, if your pension scheme allows it. Many pension funds and insurers offer voluntary extra saving. Your employer deducts the extra contribution from your gross salary, so you pay no tax on it now. You therefore do not deduct it in your tax return.

There is one trade-off. What you pay in extra through the scheme counts as pension accrual and therefore in the calculation of your annual allowance. Your room for a private annuity becomes smaller. You may use both routes side by side, but you can only use the same tax room once.

As an employer you do have to set this up: the provider must offer the option, the payroll administration processes the deduction and the scheme states the maximum extra amount. An annuity is something the employee takes out themselves, outside the employer.

Annual allowance as a DGA: what should you watch?

A director-major shareholder (DGA) often falls outside his own company's pension scheme and, since the end of pension in own management (pensioen in eigen beheer), usually builds up nothing in the company. His factor A is then zero and the allowance depends only on the salary the company pays him. Dividends do not count.

That leads to a practical point. The salary you pay yourself in 2026 determines your annual allowance for 2027. If you set your DGA salary in December, it pays to take this into account at the same time. If you do build up a pension through a company scheme with an insurer, you have a pension statement with a factor A and you calculate like an employee.

Whether an annuity is the best choice, or whether you are better off leaving capital in the company, depends on your income, your plans for the business and your private situation. We work that out together in a financial planning session.

Which mistakes are common?

• Using the wrong year's income. For the 2026 allowance you use the 2025 figures, not your expected income for this year.
• Forgetting factor A. Leaving it out makes the room look larger than it is and leads to too high a deduction. The Belastingdienst corrects this later.
• Deducting your own pension contribution paid through your salary. It is already untaxed and does not belong in the tax return.
• Paying too late. A payment that is only debited in January counts for the new year.
• Leaving the carry-forward allowance unused. Many people only look at this year and forget the room from earlier years, which expires after ten years.

Frequently asked questions

This article provides general information and is not personal tax advice. Amounts and rules change every year; check the current figures from the Dutch Tax Administration (Belastingdienst).

Figures checked on 4 November 2026. Sources: Belastingdienst, overview of life insurance figures as of 1 January 2026; Belastingdienst, Aftrekken lijfrentepremies; Belastingdienst, Nieuwe regels voor pensioenen; Belastingdienst, KG:070:2024:3 on the annual allowance calculation; Belastingdienst, Belastingberekening 2026 (box 1 rates).

Read next: Setting up a pension scheme · Future Pensions Act for employers