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Budapest, Hungary – Effective July 1, 2025, Hungary will significantly raise the family tax allowance, providing higher net income for eligible taxpayers. The change, announced by the Hungarian National Tax and Customs Administration (NAV), is intended to ease the financial burden on families, particularly those with multiple dependents or children with disabilities.
Key Figures:
- HUF 100,000 per month for one dependent (approx. USD 270)
- HUF 200,000 per month per child for two dependents
- HUF 330,000 per month per child for three or more dependents
This translates into:
- HUF 15,000 (~USD 41) in additional net income per month with one child
- HUF 30,000 (~USD 82) per child for two children
- HUF 49,500 (~USD 135) per child for three or more children
Moreover, families with a chronically ill or severely disabled dependent will receive an extra HUF 100,000 per month in tax allowance, equivalent to an additional HUF 15,000 in net income.
Procedural Impact:
Taxpayers who have submitted an advance declaration based on fixed monetary amounts (rather than the number of dependents) must submit an updated declaration in July 2025 to benefit from the increase for the remainder of the year.
This includes:
- Shared declarations between multiple eligible individuals (e.g. divorced parents splitting benefits)
- Households with dependents who are disabled or chronically ill
Failure to update the declaration will not forfeit the benefit but delays the refund until the annual personal income tax return for 2025 is filed.
Why It Matters to International Business:
For multinational corporations and expat tax professionals, this adjustment impacts:
- Payroll tax calculations
- Net salary projections for foreign assignees
- Compliance frameworks for companies managing Hungarian employees
Tax advisors and HR departments should coordinate with Hungarian payroll teams to ensure employees update their declarations promptly to avoid discrepancies or over/under-withholding.
Expert Analysis:
This change reflects Hungary’s policy shift toward supporting families amid inflationary pressures and demographic challenges. For tax professionals advising global employers, staying ahead of such local changes is critical for strategic tax planning, especially in Central Europe where family-centric tax policies are becoming more prominent.
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