The 30% Ruling for Americans in the Netherlands: What It Saves and What It Does Not
Most Americans who move to the Netherlands for work hear about the 30% ruling in their first week. Fewer hear the second half of the story: the ruling lowers your Dutch tax bill, but it does nothing for your American one. If you are a US citizen or green card holder, you still file with the IRS every year, and the part of your salary the Dutch treat as tax free is still fully taxable in the United States.
This article explains what the ruling actually does, what changes in 2027, and where Americans specifically need to be careful.
What the 30% ruling is
The 30% ruling (in Dutch: 30%-regeling or expatregeling) lets your employer pay up to 30% of your gross salary as a tax free allowance for extraterritorial costs. You do not have to prove those costs. The ruling runs for a maximum of five years and you apply for it together with your employer.
To qualify you need to be recruited from abroad, you must have lived more than 150 kilometres from the Dutch border for most of the two years before your first working day, and your taxable salary has to stay above a minimum that the Belastingdienst adjusts every year. For 2026 that minimum is a little over 48,000 euro, with a lower threshold if you are under 30 and hold a master's degree.
In practice this means someone earning 100,000 euro pays Dutch income tax on 70,000 euro. At Dutch rates, that is a saving of many thousands of euro per year.
What changes in 2027
From 1 January 2027 the ruling becomes a 27% ruling for anyone who started using it in 2024 or later. The salary threshold also goes up. If you were already using the ruling before 2024, you keep 30% for the remaining years of your term.
The bigger change for Americans is a different one. Until recently, people with the ruling could choose to be treated as a partial non-resident taxpayer. That meant your savings and investments outside the Netherlands stayed out of Box 3, the Dutch wealth tax on savings and investments. This option has been abolished for people who received the ruling from 2024 onwards. Those who had it earlier can still use it through 2026, and after that it is gone for everyone.
For an American with a brokerage account, a house back home or a family trust, this is the part of the ruling that mattered most. From 2027 your worldwide assets are in scope for Box 3 like any other Dutch resident. If that is your situation, read our article on Box 3 and US trusts, and start planning now rather than in your 2027 tax return.
What the ruling does not do: your US return
The United States taxes its citizens on their worldwide income no matter where they live. Your Dutch employment contract does not change that. Every year you file a Form 1040, and the full 100,000 euro from the example above is income on that return, including the 30% the Netherlands left untaxed.
Americans abroad normally avoid paying tax twice in one of two ways:
The Foreign Earned Income Exclusion (Form 2555) lets you exclude a fixed amount of foreign salary from US tax. For 2025 that amount is 130,000 dollars. Anything above it is taxed by the US.
The Foreign Tax Credit (Form 1116) gives you a credit for the Dutch income tax you actually paid. Because Dutch rates are higher than US rates, this credit usually wipes out the US tax on your salary completely.
Here is where the ruling bites. The Foreign Tax Credit only covers tax you paid. With the 30% ruling you pay less Dutch tax, so you have less credit to use. If your salary is above the exclusion amount, or you have other income such as bonuses, stock compensation or self-employment income, it is quite possible to end up owing US tax that a colleague without the ruling would not owe. The ruling is still worth having. The Dutch saving is almost always larger than the extra US tax. But you should not assume your US return comes out at zero.
Which method is better depends on your salary level, whether you have children (the exclusion can cost you the refundable child tax credit) and what other income you have. It is worth running both calculations rather than copying last year's choice.
Three things Americans with the ruling often get wrong
Forgetting the bank reports. Once your Dutch accounts together exceed 10,000 dollars at any point in the year, you file an FBAR (FinCEN Form 114). Your Dutch pension and any investment account count too. There is no tax on this form, but the penalties for skipping it are serious. Larger balances also trigger Form 8938 with your tax return.
Investing in Dutch or European funds. Most non-US mutual funds and ETFs are treated as passive foreign investment companies in the US. The reporting is painful and the tax treatment is bad. Many Americans in the Netherlands are better off keeping their investments in US-domiciled funds. Talk to someone before you open a Dutch investment account.
Mixing up the deadlines. Your Dutch return is due 1 May, and we can request an extension for you. Your US return is due 15 April, with an automatic extension to 15 June because you live abroad, and a further extension to 15 October on request. Interest on any US tax owed still starts on 15 April.
Your first year: the M-form
In the year you arrive you file a special Dutch return called the M-form, covering the part of the year you were resident and the part you were not. It cannot be filed with the regular online tool. This is also the year in which the 30% ruling, your US filing position and the treaty between the two countries all interact for the first time, so it pays to get it right. Dutch refunds in the arrival year are common, and a refund on the Dutch side can change what you owe on the US side.
What we do for Americans in the Netherlands
TaxDoctor is a Dutch tax practice that works with US citizens every week. We prepare your Dutch return, apply the 30% ruling correctly, and look at your situation from both sides so that the Dutch choices we make do not create a surprise in the United States. If you have a US preparer already, we work alongside them.
Rules and thresholds change every year, and the figures above are for 2025 and 2026. If you want to know what the ruling means for your own numbers, book a 15-minute introductory call or read more about our services for US expats.
