As of 1 January 2020, a new tax allowance is available under the Hungarian Personal Income Tax Act, which provides for that mothers raising four or more children might be exempted from the payment of personal income tax.
Previously, the tax base of the personal income tax could be reduced with two tax allowances: the family tax allowance and the allowance for couples in their first marriage. As of the beginning of this year, a third tax allowance has been introduced: the allowance granted to mothers raising four or more children. According to the new provisions, persons eligible for this allowance might deduct certain incomes from their tax base calculated for the payment of personal income tax. In particular, salary received under employment contract might be deducted from the tax base.
According to a governmental press conference held in the beginning of 2020, the target of the Hungarian Government is to extend the personal income tax exemption also to mothers raising three children as of 1 January 2021. Currently this proposal is still under political discussion.
By Gabriella Galik, Partner, KCG Partners Law Firm