The Effective Tax Rate Calculator is a tool to compare taxation in the USA and the Netherlands. It answers the question: if you make the same amount of money in the USA and in the Netherlands, how much would your effective tax rate be in each country?

I used the Effective Tax Rate Calculator to analyze the effective tax rate at various income levels. Some of the findings were surprising to me.

Case Study 1: Double income, no 30% Ruling

This graph compares the USA and Dutch effective tax rates with the following inputs:

• U.S. filing status of 'Married, Filing Jointly'
• PartnerA and PartnerB make the same amount of money
• They have one dependent child under the age of 12
• A U.S. state income tax rate of 3%

I plotted the effective tax rates starting from a combined income of $40,000 to a combined income of $200,000.

Conclusions:

1. The Dutch tax lower incomes far less steeply than in the USA. For example, at a household income of $40,000 the U.S. effective tax rate is 9.18%, while the Dutch rate is a mere .05%.
2. The crossover point between Dutch and USA taxes occurs at a household income of about $84,000. This was surprising to me. I expected the crossover point to be much lower than that. According to the National Statistics Office of the Netherlands only 2% of Dutch households make more than €78,000 euros a year, so a lot of Dutch households pay lower taxes than their American counterparts.
3. At a household income of $200,000 the USA effective tax rate is 24.42% and the Dutch is significantly higher at 36.81%. Still, 36.81% is a far cry from the commonly held belief that '50% of your income is taxed' in the Netherlands.

Case Study 2: Double income, 30% Ruling

This graph compares the USA and Dutch effective tax rates with the following inputs:

• U.S. filing status of 'Married, Filing Jointly'
• PartnerA and PartnerB make the same amount of money
• They have one dependent child under the age of 12
• A U.S. state income tax rate of 3%
• Both partners have the 30% ruling

I plotted the effective tax rates starting from a combined income of $66,000 to a combined income of $200,000. We chose a starting income of $66,000 because there is a minimum income requirement for the 30% ruling.

Conclusions: With the 30% ruling the Dutch effective tax rate is lower than the USA effective tax rate at all household incomes up to $200,000!