Personal income tax return assessment year 2026: what will change for you?

The political world has been talking for some time about a thorough personal income tax reform. The ambition is clear: to reduce the tax burden on labor and leave more net for the taxpayer. That ‘blueprint’ already exists, but the major reform is still pending for now. Only a limited number of things have been effectively changed for the 2026 tax year return.

Nevertheless, these changes should not be underestimated. While limited in number, they may have a significant financial impact for certain groups of taxpayers. We discuss the most relevant novelties below.

1. Simplification of housing taxation.

The tax rules surrounding real estate loans have already changed dramatically in recent years. For owner-occupied housing in Flanders, there has already been since 2020 No more tax breaks available for new loans. As compensation, registration fees were reduced to 2%. For existing loans, however, benefits previously accrued remain in effect.

However, the changes to the 2026 tax year return relate to loans for a non-owner-occupied home, such as a second residence, a vacation home or an investment property. And unlike the owner-occupied home, here no transitional arrangement: the changes apply to all current loans, not just for new ones.

Specifically, there are two major changes:

• Interest deduction disappears completely. Until tax year 2025, you could deduct the interest paid on a loan on a non-owner-occupied home from your property income. That benefit will be completely eliminated. Because this deduction took place at the marginal tax rate (usually at 40 or 50%), for taxpayers with significant private patrimony financed with debt, this can amount to thousands of euros per year.
• Only one advantage remains: long-term savings. For loans taken out before 2024, capital repayments and linked life insurance premiums can still give rise to a long-term savings tax credit. This benefit amounts to 30% and is limited to a certain initial tax amount. The former systems of federal housing bonus and construction savings are gone for good. For a married couple who took advantage of multiple schemes, the loss of tax benefit can amount to about 1,000 euros in additional taxes per year.

2. Elimination of some tax credits.

Under the guise of simplification, numerous tax deductions were eliminated that were rarely or never used. However, two specific abolishments will be noticeable for many Flemish taxpayers.

• Service vouchers. The Flemish tax reduction for payments with service checks is no longer applicable as of tax year 2026. Until last year, as a Fleming you could enjoy a tax reduction of 20% on paid service checks, up to a maximum of 1,790 euros, good for a maximum benefit of 358 euros. That tax benefit disappears completely.
• Legal expenses insurance. The federal tax credit for legal expenses insurance premiums has also been eliminated. Those with such policies previously enjoyed a 40% reduction on a maximum premium of 320 euros per year, representing a maximum benefit of 128 euros. This benefit expires for premiums paid from July 1, 2025.

De facto, this means that the fiscal picture for people who regularly hire a cleaner or housekeeper AND have legal expenses insurance will get significantly worse.

3. Higher limit on net worth of dependent children

Not everything in this year's tax return is negative news. There is also a notable improvement for families with children who have an additional income.

One of the conditions for a child to become a dependent for tax purposes is that the child should not receive too much of his or her own income (the so-called NATIONAL RESOURCES). Due to the increased popularity of student work many students found themselves above the limit, resulting in the loss of their dependents. This not only affected the parents - who lost their tax-free allowance for that child - but was also perceived as unfair.

The legislature has intervened. Starting in assessment year 2026, the border Of the net existences greatly increased to 12,000 euros, and this regardless of the parent's family situation. There used to be a distinction depending on whether the parent was married, legally cohabiting or single; that distinction is disappearing. In addition, the Exempt bracket for student income doubled to 6,840 euros.

This also has a practical consequence that should not be underestimated: children living in September graduation and immediately enter the labor market with a first job, will in most cases be able to still be dependents of their parents for that tax year. In the past, this was almost never the case because of the earlier, strict limit.

Conclusion

The personal income tax return for assessment year 2026 does not bring any major reform, but it does bring some targeted changes that can significantly affect your fiscal bottom line. Especially if you real estate property, service vouchers used or have children who earn extra money, it pays to take a critical look at your tax return.