The government announced this week that it will increase the maximum untaxed travel allowance. To compensate employees for the sharp rise in fuel prices and to support purchasing power, the tax-free allowance will increase from €0.23 to €0.25 per kilometer. This increase offers employees welcome compensation, but what exactly does this mean for you as an employer? We list the most important tax and practical issues for you.
Tax allowance, not an obligation
The government is making a strong appeal to employers to make use of this fiscal facility and is consulting with social partners on this matter. However, it is important to emphasize that this is an extension of the tax exemption. As an employer, you are not obliged to actually increase the mileage allowance. This may be more nuanced if, for example, your terms of employment indicate that you are looking for a link to the maximum tax exemption for the reimbursement of travel expenses.
Costs and free space
Although the increase is tax-facilitated, it is not 'free'. If you decide to increase the allowance to €0.25, as an employer you will pay the extra two cents per kilometer yourself. For the employee, however, this provides a nice benefit: with an average fuel consumption of 1 to 15, this increase leads to a benefit of approximately € 0.30 per liter of fuel.
Do you currently already pay out more than € 0.23 per kilometer and designate the excessive portion in the free space of the work-related costs scheme (WKR), or do you gross up this amount? If so, the new measure will provide you with immediate savings and additional headroom. This increase also makes the so-called "exchange" (where the employee surrenders gross salary for a higher net travel allowance) slightly more attractive for the employee. For the employer, this exchange is cost-neutral. It may even save on social security contributions.
Retroactive effect
The increase of the maximum untaxed travel allowance to € 0.25 per kilometer is valid retroactively for all of 2026. This will require the necessary adjustments in payroll administration in appropriate cases. In any case, we consider it important that you project the increase onto your own terms of employment and adjust the allowance where necessary (or desirable), possibly in the form of a tax exchange.
Attention!
The announced change in the scheme has not yet taken final effect. An approving decision is expected to follow shortly.
Want to know more?
Would you like to know whether increasing the travel allowance is wise in your situation and how you would like to implement this increase? Or do you need help in applying the increase retroactively in your payroll? If so, please feel free to contact us.