“Don’t pay taxes” and “tax-free business” are search terms that are frequently used every year. Logical too. As a starting entrepreneur you want to know where you stand, how much you need to reserve and whether it is possible to make a profit from € 30,700 without paying income tax.
The short answer: yes, you can. But only up to a certain point and under specific conditions. In this article I will explain to you step by step how to calculate it 2026 looks, what profit amount is associated with it and why that amount is different than in 2025 (€31,300).
What does ‘paying no taxes’ mean in 2026?
Tax-free entrepreneurship does not mean that you pay nothing at all. This article is specifically about the Income tax in Box 1. Other taxes, such as VAT and the income-related contribution to the Healthcare Insurance Act (ZVW), are separate from this and you almost always pay them.
The reason why you do not pay income tax on a certain profit is a combination of:
These three together can ensure that the calculated income tax is completely wiped out.
The starting point: your profit in 2026
We always start with you gain. Not with your turnover.
Profit = turnover – costs.
All amounts in this article are:
- excluding VAT if you are liable for VAT;
- including VAT if you are VAT exempt.
The VAT you pay or receive back has no influence on this calculation. Sales tax and income tax are two different taxes.
Entrepreneur’s deduction in 2026
Are you an entrepreneur for income tax purposes and do you meet the hour criterion of 1,225 hours per year? Then you are entitled to entrepreneurs’ deduction.
Self-employed deduction
The self-employed person’s deduction will be further reduced in 2026. In 2026 this will be:
Self-employed deduction 2026: € 1,200
This deductible item will be further reduced in the coming years to € 900 in 2027. This is important to include in your long-term planning.
Starter deduction
In addition, there is the starter’s deduction. This will remain unchanged in 2026:
Starter deduction: € 2,123
You may apply this deduction a maximum of three times in the first five years of your entrepreneurship. If you are no longer a starter, this deduction will no longer apply.
Calculation example entrepreneur deduction 2026
We take a starting entrepreneur with the following figures:
- Profit before tax: €30,700
- Self-employed deduction: € 1,200
- Starter deduction: € 2,123
Profit after entrepreneurs’ deduction: € 27,377
SME profit exemption in 2026
After the entrepreneur’s deduction, the SME profit exemption is automatically applied. You do not have to request this separately.
SME profit exemption 2026: 12.70%
Calculation example SME profit exemption
- Profit after entrepreneurs’ deduction: € 27,377
- SME profit exemption (12.70%): € 3,477
Taxable income Box 1: € 23,900
Income tax Box 1 in 2026
Income tax is calculated on this taxable income. The following brackets will apply in 2026:
- Up to €38,882 → 35.70%
- €38,883 to €79,136 → 37.56%
- From €79,137 → 49.50%
Calculation example income tax tax-free 2026
With a taxable income of € 23,900, the full amount falls into the first bracket.
Gross income tax Box 1: €8,532
Tax credits in 2026
Now comes the crucial point. You will receive tax credits on this amount, which will be automatically included in your tax return.
- General tax credit: €3,115
- Labor discount: €5,420
Total tax credits: €8,535
The tax credits are higher than the calculated income tax.
Income tax to be paid: €0
How much profit can you make in 2026 without income tax?
For one starting entrepreneur without other income, this amounts to a profit of approximately:
± € 30,700 profit without income tax
This amount is lower than in previous years due to the further reduction of the self-employed deduction.
The total calculation for 2026 at a glance (this is part of the tax template ‘set aside for your 2026 taxes‘:
Important notes
- You always pay Income-related contribution to the Healthcare Insurance Act (ZVW). In this example approximately € 1,159.
- Do you have income from employment? Then this calculation works differently. In this article read how that works.
- Do you have mortgage interest deduction or other Box-1 income? Then the result shifts.
- Do you have a profit of €30,700 and do you still have to pay tax? Or do you even get more back? That could be due to many things. For example, mortgage interest deduction, other income in Box 1, Box 2 or Box 3 of your income tax or in your provisional assessment.
- Are you no longer a starting entrepreneur? Then you are not entitled to the starters deduction of € 2,123. The other business deductions and discounts still apply. The profit you can make without paying tax is therefore higher for you as a non-starter, namely € 28,400 in 2026.
- Do you have to stop working once you reach this amount? No. This article shows where the zero limit is, not what is sensible. Even above this profit, you still retain most of your income. In addition, higher profits are often desirable for growth, investments and, for example, mortgage applications.
- Do you have a higher profit from this € 30,700? For example €40,000? Then you are not allowed to first deduct the € 30,700 from this and then calculate a profit of € 9,300. Then your starting point is the € 40,000 profit.
Keep control of your taxes in 2026
Do you want to know exactly how much you need to reserve, even if you exceed this limit? Then it is important not to aim for ‘no tax’, but for predictability.
This calculation is part of the template ‘Set aside for your taxes’. This way you can see what you need to reserve per month and you will not be faced with any surprises.
Have you just started? Then the Starter Bundle a logical continuation, in which you will find all the important financial choices for your first years.
Disclaimer: this calculation is indicative. You always remain responsible for filing a correct and complete tax return
#Taxfree #business #profit #income #tax #Happy #Financial