They also promised a ban on the wearing of burqas, the coverup garments worn by some Muslim women, the BBC reported.
The Christian Democrats and the Liberals or VVD hold 52 parliamentary seats, just over one-third. Some of their plans, including the burqa ban and the tougher stand on immigration, appear aimed at attracting Geert Wilders' Freedom Party.
The Freedom Party gained ground in the June election, which left the country with no party in the majority.
The coalition has adopted "Freedom and Responsibility" as its motto. Leaders acknowledged almost everyone will be affected by a cut of $24 billion in government spending.
"Important reforms will be carried out in the Netherlands," Liberal Party leader Mark Rutte said. "We want to give the country back to the working Dutch citizen."
The agreement must be approved Saturday by members of the Christian Democrats. Some in the party oppose an alliance with Wilders, known for his vehement opposition to Muslims.