Hungary: Tax allowances and leave in 2023

2023 is starting with significant changes for employees and employers in Hungary: the introduction of new tax allowances, a new type of leave and the minimum wage increasing.

Minimum wage

Just like the end of each year, a new wage agreement was reached between the Hungarian government and employers last December. Accordingly, from 1 January 2023, the amount of the lowest wage, i.e. the minimum wage, has been increased to HUF 232,000 gross, while the amount of the guaranteed minimum wage has been increased to HUF 296,400. At the same time, the basis for the personal allowance has been increased to HUF 77,300, which means a monthly tax allowance of HUF 11,595.

Increasing tax allowances

However, from 2023, the amount of the family tax allowances enforceable from the tax base remains unchanged; this amount in the case of a dependent beneficiary who is permanently ill, or a severely disabled person is HUF 66,670 higher per month, so the amount of the allowance for these children increases by HUF 10,000 in tax terms. Employees will be able to request the validation of this allowance on the tax advance declaration.

Looking at the tax allowances, the benefit for young people under 25 also increases: in 2023 the amount of the allowance is HUF 499,952 per month of entitlement, which means a tax savings of HUF 74,993.

Newest element of tax allowances

A new allowance for mothers under the age of 30 has been introduced in Hungary starting this year. A young mother is entitled to the allowance if she became entitled to the family tax allowance after 31 December 2022 regarding her unborn child, biological child or an adopted child. This allowance is therefore available to young mothers who have reached the age of 25, are under 30 at the start of their entitlement and became eligible for the family tax allowance after 31 December 2022, for example they have reached the 91st day of pregnancy after 31 December 2022 or their child is/was born after 31 December 2022. The maximum monthly allowance amount in 2023 is HUF 499,952 per month of entitlement, which means a tax savings of HUF 74,993.

Leave

A new type of leave has been added to the Hungarian Labour Code. Employees are entitled to 44 working days of parental leave up until their child reaches the age of three, subject to at least one year of employment. This leave must be granted at the time requested by the employee. For the duration of the parental leave, the employee is entitled to 10% of the absence pay, reduced by the amount of the childcare benefit or childcare allowance paid for this period. A decision awarding benefits must be requested.

The regulation on paternity leave is also changing. Upon the birth of a child, in 2023 the father shall be entitled to ten working days’ leave –instead of the five granted previ­ously –no later than by the end of the second month following the birth of the child or, in the case of adoption, no later than the end of the second month following the finalisation of the decision authorising the adoption, granted when requested, in no more than two parts. The employee is also entitled to paternity leave if the child is stillborn or dies. The employee is entitled to absence pay for five working days of paternity leave, whilst from the sixth working day onwards they are entitled to 40% of the absence pay

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