Belgian Arizona Coalition Tax Reform Passes First Hurdle

The Belgian Chamber of Representatives’ Finance Committee adopted the Arizona coalition’s landmark personal income tax reform bill in first reading on Wednesday evening, moving the flagship legislation one step closer to a full parliamentary vote. The reform, sponsored by Finance Minister Jan Jambon (N-VA), represents one of the most significant overhauls of Belgian personal income taxation in recent decades, La Libre Belgique reported.

What the Reform Entails

The centerpiece of the reform is a phased increase of the tax-exempt quota (“quotité exemptée d’impôt”) — the income threshold below which no tax is owed. Currently set at €10,910, the quota will rise to €14,450 by tax year 2030 and €15,600 by tax year 2031, though the latter figure remains subject to modification by the next government. Jambon has announced that a Royal Decree will modify the calculation of professional withholding tax, ensuring workers see the benefit in their monthly net salary rather than through the annual tax assessment.

According to L’Avenir, the bill also includes several other significant measures:

Family support: The tax-exempt quota for the first two dependent children will increase to €2,650 per child by 2029, while indexation of the exempted amount for subsequent children will be frozen.
Spousal quotient phase-out: For non-retired couples, the maximum spousal quotient amount will be halved by 2029. Retired couples benefit from a 20-year transition period. From tax year 2027, maximum amounts will no longer be indexed.
Voluntary overtime: The limit on tax-exempt voluntary overtime hours will increase to 360 hours.
Copyright regime extension: The favourable tax treatment for author’s rights will be extended to the IT sector.
Company directors: Minimum remuneration rises from €45,000 to €50,000, with flat-rate benefits in kind capped at 20% of gross salary.
Employment tax bonus: The bonus for very low wages increases from 52.54% to 63% (tax years 2027-2028) and then to 72% (from 2029).
Individualized social security contributions: From income year 2028, the Special Social Security Contribution (CSSS) will be calculated individually rather than per household.
Integration income: The social integration income (RIS) will be taxed in principle as replacement income.

Political Context

The Arizona coalition — named after the colours of the Arizona state flag, which correspond to the five coalition parties (N-VA, MR, Les Engagés, Vooruit, and CD&V) — was sworn in on February 3, 2025, after 18 months of negotiations following the June 2024 federal election. Led by Prime Minister Bart De Wever, the first Flemish nationalist to hold the office, the government has made tax reform a central pillar of its agenda, with the stated ambition to “reward work” by reducing the tax burden on labour income, as noted on Wikipedia.

Controversy: Uneven Family Impact

The reform has not been without controversy. On May 19, the Ligue des familles (Family League) published an analysis showing that the reform would disproportionately benefit childless households compared to families with children. According to La Libre Belgique, the organization calculated that by 2030, a childless couple will gain €271 more per year than a couple with three children, and €1,284 more than a single-parent family with three children.

Madeleine Guyot, Director General of the Ligue des familles, criticized the approach: “This defies all logic. While many costs related to children are rising, the government chooses to strengthen support for households without children compared to those with two or more children and single-parent families.”

Broader Fiscal Context

The consumer organization Test-Achats has noted that the broader Arizona fiscal package includes the elimination of several tax advantages (including deductions for adoption expenses, electric vehicle purchase incentives, and second residence loan interest), reductions in alimony and donation deductions, and a freeze on indexation of tax thresholds from 2025 to 2029.

What’s Next

The bill now proceeds to a second reading in committee before potentially being placed on the agenda of the plenary session for a full vote. If adopted, the first measures — including the employment bonus increase and the spousal quotient indexation freeze — would take effect from income year 2027. The full implementation timeline extends through 2031, with the final tax-exempt quota level subject to confirmation by the next government.

Observers will be watching closely to see whether opposition parties — including the PS, PTB, Ecolo, Groen, and Vlaams Belang — seek to amend the legislation during the remaining parliamentary stages, and how the reform will interact with Belgium’s parallel pension and labour market reforms.

Research compiled from Belgian French-language news sources (La Libre Belgique, L’Avenir), Wikipedia, Test-Achats, and Ligue des familles analysis.