Hungary’s family tax system provides significant tax relief at the third lowest personal income tax rate in Europe, thus rewarding those who raise children while working. According to the last closed tax year, this left a total of more than 310 billion forints (EUR 768 million) in families’ pockets in 2022, with 900,000 parents claiming family tax allowances, the Finance Ministry’s Parliamentary Secretary of State reported to MTI.
András Tállai stated that in Hungary, the new simple, proportional family tax system, which recognizes two fundamental values: working and raising children while working, came into effect on January 1, 2011. The new tax system has provided significant financial support for working parents and families with one or more children, with the biggest tax cut in 20 years.
For example, between 2016 and 2019, the family tax credit for two children was doubled in four equal steps compared to 2015. The amount of the current benefits, expressed in tax, is HUF 10,000 (EUR 25) per child for families with one child, HUF 20,000 (EUR 50) for families with two children, and HUF 33,000 (EUR 81) for families with three or more children.
The Secretary of State said that from January 1, 2015, the first-married couples’ allowance was introduced as a new tax base allowance, which can be claimed together with the family allowance from 2016. The benefit can be claimed for 24 months after marriage at a rate of HUF 5,000 (EUR 12) per month in tax. This means that the family’s net income will increase by HUF 120,000 (EUR 300) during this period.
Tállai added that from January 1, 2020, mothers with at least four children are fully exempt from paying income tax on their earned income.
The same benefit also applies for young people under 25 since last year, and from this year the government extended the exemption to women who have children before they turn 30.
Moreover, as part of the family protection measures in response to the epidemic, families with children were refunded last year a certain part of the personal income tax, simplified tax contribution, and small-taxpayer business tax paid in 2021. The maximum family tax refund was HUF 809,000 (EUR 2,000), which both parents could receive, emphasized Tállai.
The government official also drew attention to the fact that the government has extended the 5% VAT rate on the sale of new homes for two years, until December 31, 2024, as a measure to stimulate the economy and to further help families create homes.
The prolonged war and the sanctions policy in Brussels have now radically changed the economic landscape. In this difficult situation, the government’s objective is clear and unequivocal: to protect family allowances, the Finance Ministry’s Secretary of State stressed.
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