US tax for Americans in the Netherlands
There is a US–Netherlands income tax treaty and a totalization agreement. The expat ruling — still widely called the 30% ruling — exempts part of your salary from Dutch tax. Less Dutch tax paid means less to credit on Form 1116, so the ruling shifts tax rather than removing it, and the percentage itself is scheduled to change.
The ruling moves tax; it does not remove it
Exempting part of a salary from Dutch tax reduces the Dutch tax paid, and the foreign tax credit is limited to tax actually paid. Where the remaining Dutch tax still exceeds the US tax on the same income, nothing lands on the American return and the effect is simply a smaller carryforward. Where it does not, the US collects the difference.
Dutch rates are high enough that the first case is the common one — which is why the ruling's US cost is usually invisible until the year it is not.
What the ruling is now, and what it becomes
The exemption is 30% for 2025 and 2026, and becomes a flat 27% from 1 January 2027. A stepped reduction announced earlier was reversed before it ran its course, so anyone working from a 30/20/10 description is working from a plan that was abandoned.
Partial non-resident taxpayer status, which used to let ruling holders keep foreign income and assets outside Dutch tax, was abolished from 1 January 2025, with transitional relief for people who already held it. For an American that mattered more than it sounds: it changed which income Dutch tax reaches, and therefore what there is to credit.
Box 3 is a tax on a deemed return
Box 3 charges tax on an assumed return on net assets rather than on income actually received. That puts it outside what Form 1116 recognises as an income tax in most cases, so it is generally not creditable — and the long-running Dutch litigation about how the deemed return should be computed does not change the American answer.
The same facts can give a different US answer each year
Because the ruling's percentage and scope have moved repeatedly — and move again in 2027 — the Dutch tax paid on an unchanged salary changes from year to year, and so does the credit. This is one of the few postings where last year's conclusion is genuinely unreliable as a guide to this year's.
The totalization agreement covers the social security half
Dutch social insurance sits inside the totalization agreement, so a self-employed American contributing there generally escapes the 15.3% US self-employment charge, on a certificate of coverage. That is independent of the ruling and of box 3.
A worked example, tax year 2025
A single American employed in Amsterdam on $160,000, comparing the Dutch tax paid with and without the ruling. Dutch figures are illustrative; the US figures are computed.
Scroll the table sideways
IRC §901, §904 and §911; US–Netherlands income tax treaty; US–Netherlands totalization agreement; Dutch expat ruling rules, including the flat 27% applying from 1 January 2027 and the abolition of partial non-resident status from 1 January 2025 with transitional relief; box 3 rules on the deemed return; IRS Publication 54; IRS Publication 514; Rev. Proc. 2025-32; 31 CFR 1010.350. US figures are tax year 2025. Checked 22 September 2026.
Questions Americans in the Netherlands ask
Does the 30% ruling save me US tax?
No — it usually moves tax rather than removing it. Exempting salary from Dutch tax reduces the foreign tax credit available, so the US may collect what the Netherlands does not. At high Dutch rates the effect often shows up as a smaller carryforward rather than a bill.
Is box 3 tax creditable on my US return?
Generally no. It is charged on a deemed return on net assets rather than on income received, which puts it outside the income taxes Form 1116 recognises.
What is happening to the ruling's percentage?
It is 30% for 2025 and 2026 and becomes a flat 27% from 1 January 2027. An earlier stepped reduction was reversed before it ran its course, so descriptions built on a 30/20/10 taper are out of date.
I had partial non-resident status. Does that still exist?
It was abolished from 1 January 2025, with transitional relief for people who already held it. For an American it changed which income Dutch tax reaches, and therefore how much foreign tax there is to credit.
I have not filed for several years while in the Netherlands. What now?
If the failure was non-willful — which describes most people in this position — the Streamlined Foreign Offshore Procedures waive the failure-to-file, failure-to-pay and FBAR penalties: three years of returns, six years of FBARs, and Form 14653.
On the expat ruling in the Netherlands?
Twenty minutes settles what the ruling costs on the US side, and what changes when the rate does.