The Cabinet has decided to scale back a planned increase to the childcare allowance next year, using the savings to help cover the cost of scrapping other budget cuts that had previously been on the table. Meanwhile, the coalition of D66, CDA, and VVD still hasn't settled on what to do about the tax system covering savings, investments, and real estate, known as Box 3.
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Childcare Allowance Increase Gets Trimmed
Originally, the government intended to raise the childcare allowance significantly in 2027. That plan has now been dialed back so the money can instead go toward reversing previously planned cuts to social security. According to documents outlining the 2027 national budget, this reduced increase will free up €350 million next year.
Insiders were quick to clarify that this doesn't mean parents will end up paying more for childcare. The allowance will still go up compared to this year's level, meaning families will still see their childcare costs drop. One source close to the matter put it simply: it'll be a bit less than originally expected, but parents will still notice real savings.
Another insider added that this is really just a temporary delay, and the government plans to make up the difference starting in 2028.
Box 3 Tax Overhaul Faces Further Delay
The Cabinet also remains stuck on how to handle the incoming Box 3 tax overhaul, which had been scheduled to take effect in 2028. Coalition parties have spent weeks going back and forth on the issue without reaching common ground.
As a result, they're now planning to delay the legislative proposal currently sitting in the Senate, according to leaked budget documents.
The new system was designed to tax people based on their actual investment returns rather than an estimated.
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