The labour credit is a credit taken from the tax amount (so it immediately raises the net income) to cover the costs you may have. So in a way you are rewarded that you earn an income having a job.
The credit goes up with inflation every year. And the government uses it as an "instrument" to convince people to find a job instead of claiming unemployment benefits etc.
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The labour tax credit is calculated as a percentage of your wage (1,795% over first EUR 8,132 of income and 12,421% over everything above EUR 8,132). Maximum is EUR 1,357 annually (for 2006). |