• Viktor Orbán presented his proposals for economical reforms for Hungary. Within this framework, "the largest taxation simplification programme in Europe" is to be launched. It is part of the household policy of Budapest.
• 1 of the elements of a large-scale taxation improvement is the eventual exemption of mothers of at least 2 children from income taxation on labour revenues. The planned solutions will cover almost 1 million women, so almost 1/5 of all Hungarian residents.
• A solution of a peculiar nature on a global scale is the absence of time limits for taxation exemptions. It means that after the birth of a certain number of children, a female will be exempt from income taxation for the remainder of her life.
• Social benefits related to baby care and childcare will besides be exempt from taxation. After more than 14 years, the amount of the household relief will besides be valued. Its value will be doubled.
• The Hungarian authorities supply for increased support for pensioners affected by crucial increases in the prices of goods and services. It will consist of a refund of the taxation on goods and services paid on the occasion of the acquisition of selected types of food.
The Ambitious Goals of Budapest
Prime Minister Viktor Orbán, during his Saturday (22 February) speech on the state, as 1 of the 3 pillars of Hungary's economical improvement indicated his intention to launch "the largest taxation simplification programme in Europe". Its activities are primarily aimed at families. They are within the framework the improvement of a family-friendly policy for respective years to improve fertility. For this purpose, various measures are used, headed by taxation legislation. 1 of the most recognisable ways is the exemption from individual income taxation introduced from 1 January 2022 (carbon). Személyi jövedelemadó), income from work for persons under the age of 25 (in the case of mothers up to the age of 30). It is worth noting that, unlike in Poland, the exemption limit is mobile and depends on the average monthly gross remuneration in the national economy in the erstwhile taxation year (7,292,400 forints, i.e. approx. 80,200 PLN per year) and the exemption does not cover income from civilian contracts. In the past, the Hungarian authorities have besides benefited from another forms and measures of household support. For example, as of 1 January 2023, women under the age of 30 have the right to redeem all student loans taken out if they give birth or adopt a kid during their studies or within 2 years of their completion. However, the actions announced a fewer days ago by Viktor Orbána seem to be a fresh quality in the area of household support.
A life income taxation exemption for mothers of 3 and 2 children
As of 1 January 2022, Hungary is in force For life and unlimited amounts taxation exemption from income from labour obtained by mothers who have given birth to at least 4 children. In practice, a comparatively tiny group of women benefit from this solution – about 65-70 thousand.
A akin taxation preference has been introduced in Poland since 2022 under the alleged Polish Deal (Article 21(1) point 153 of the Act of 26 July 19991 on individual income tax). It serves persons who exercised parental authority, served as guardians if the kid lived with him, or served as foster household on the basis of a court ruling or a contract concluded with an old man, or, in the case of adult children learning, carried out a maintenance work on him, or acted as foster family. However, the Polish solution is periodic (when exercising parental authority over at least 4 children) and quota limited (up to PLN 85 528 of income per year from employment or akin relationship, contract orders, non-agricultural business activity and maternity benefit). It is worth noting at this point that the Ordo Iuris Institute has for many years not only called for more ambitious measures to reduce the taxation burden on families, but besides proposes circumstantial solutions, specified as the household quotient. In 2021, at the phase of preparation of the Polish Deal, the Institute pointed out that it was essential to consider extending the government's 4+ relief to families with less children.
As the Prime Minister of Hungary stressed during his Saturday speech, “it has been a long time since our dream that parents raising children should not be in a worse financial position than those who do not have children”. The way to accomplish this will be to extend A life taxation exemption besides for mothers of 3 and 2 children. The first of these groups, covering about 200-250,000 women, will be exempt from income taxation from October 2025. In the case of mothers of 2 children (about 600-650,000 women), the reform, given the considerable cost to the state budget, will be implemented gradually:
- From 1 January 2026, mothers under 40 will be released,
- from 2027 persons aged 40-50;
- from 2028, persons aged 50 to 60;
- And from 2029, women over 60 will join them.
Although the details of the bill have not yet been published, on the basis of available information, including the rules on the exemption from taxation of mothers of at least 4 children, it can be noted that an crucial component of the Hungarian relief will be to take into account children with their mother’s full life, not just children born after taxation regulations entered into force. Thus, the request for relief will be to rise the required number of children at any time of the mother's life. This means that both young mothers and women approaching retirement age, regardless of their marital status, married women and single mothers, as well as mothers of children who have died or been raised in the past, will be able to benefit from the relief, without varying to biological and adopted children.
However, the relief is not common. First of all, It's not the children's father.Whether or not they participated in their upbringing. Moreover, despite the absence of periodic and quota restrictions, the simplification applies only to women's income from work. Beyond its borders, income from business activities, property disposal or capital gains will remain.
After the improvement is introduced, approx.. 850-900 1000 Hungarian women. In a country of 9.6 million inhabitants, of which about 4.9 million women, this is simply a crucial value. At the same time, the estimated cost of implementing the announced improvement is estimated within 800-900 billion forints per year (about PLN 8-9 billion), which became the subject of criticism from the Hungarian opposition.
Exemption of social benefits and extension of the household benefit
From Viktor Orbána's announcements it is besides clear that since 1 July 2025. exemption from individual income taxation will be social benefits related to the birth of a child. The first is CSED (coal. Csecsemőgondozási Díj), i.e. a kid care allowance for 24 weeks (168 days) after childbirth of 100% of the average regular gross wage of the last year. The second benefit is GYED (coal. Gyermekgondozási Díj), i.e. the provision of care for a kid who is entitled to the child's father or parent (in certain situations besides to grandparents) after the completion of the CSED. It can be paid until the kid reaches the age of 2 with 70% of the average gross wage of the last year, but no more than 70% of the minimum wage twice.
According to the erstwhile announcement, the taxation improvement is intended to double the pro-family relief (coal. családi adókedvezmény). As in Poland, the relief is granted to children considered dependent (coal. eltartott), i.e. minors, under 25 and disabled. It functions on the basis of income deductions, which is different from Poland, where taxation deductions are based. The amount of the relief, since its introduction in 2011, is 10,000 forints per period for having 1 child, 20,000 forints (i.e. a full of 40,000) for two, and 33,000 forints for 3 or more children. From 1 July 2025 the relief is expected to increase by 50%, and from 1 January 2026 by another 50% of the starting value. After full implementation of the improvement in 2026, the amount of the household allowance will so be:
– 20,000 forints for the first child,
– 40 000 forints for 2 children,
– 66,000 forints for 3 or more children (i.e. in the case of having 3 children it is an amount of 198 000 forints, and e.g. fives – 330 000 forints).
It points out that for the first childFamily relief can be granted even during pregnancy, from the 91st day after conception (about 3 months of pregnancy), on the basis of a medical certificate certifying that the pregnancy has reached at least the indicated day.
‘Ilyen árak mellett a nyugdíjasoknak külön figyelem jár’
"At specified prices, pensioners deserve peculiar attention" –
Viktor Orbán besides highlighted the situation of over 2 million pensioners as part of the household support plan. In view of the crucial price increase resulting, inter alia, from the highest inflation in the European Union, the support for this group of residents from the second half of 2025 is to be provided through reimbursement of part of the ÁFA tax (coal. Általános Forgalmi Adó; is the equivalent of the Polish taxation on goods and services) up to a certain amount per period erstwhile purchasing selected types of dairy products, vegetables and fruit. According to the Minister of National Economy Márton Nagy, the maximum amount of the refund will be fixed monthly and may amount to around 10-15 1000 forints per period (about PLN 100-150).
What's worth emphasizing, authorities in Budapest considered that it would be incorrect to supply aid by reducing the rates of taxation on goods and services, as in the past, for example, in Poland. This solution was considered only to lead to an increase in the profits of commercial networks and suppliers. Instead, Discount cards will be issued to pensioners (in the determination phase, whether electronic cards will besides be issued outside the physical ones), which can be utilized during transactions in stores. Then, the amount of the taxation paid on goods and services will be reimbursed to the pensioner by adding it to the monthly pension paid.
Summary
Hungary is the only country not only in Europe but besides in the planet to introduce specified a wide-ranging, life-long income taxation exemption for mothers raising at least 2 children. Indeed, this distinguishes Hungarian family-friendly policies from another countries. The cost of the projected taxation reforms will be immense for the budget, counted in trillion forints. However, in the context of a progressive demographic collapse, specified a course of action should be considered worthy of consideration, as introducing fresh quality not only in household policy but besides in taxation policy towards individuals. At the same time, if the proposed legal arrangements stay in the form of the proposed ones, they should not origin taxpayers crucial explanation problems in applying them. An interesting, although not a revolutionary solution, is the return of part of the taxation on goods and services to pensioners. However, it should be borne in head that it will be susceptible to abuse, e.g. erstwhile buying besides for those who do not have a preference. Nor will the reimbursement be utilized for purchases made from tiny businesses, specified as the dairy sector, which are exempted from the ÁFA.
Dr Tomasz Wozniak – Analyst of the Ordo Iuris Analysis Center.
== sync, corrected by elderman ==
