If the personal income tax is not sufficient to use the full allowance, the remainder can be deducted from the social security contribution. Employees posted to Hungary from abroad may also claim the allowance, subject to certain conditions.
Personal income tax exemptions
- young people under the age of 25 (up to a statutory income cap)
- mothers under the age of 30
- mothers raising three or more children (since 1 October 2025) and mothers of four or more children
- mothers of two children, phased in by age: under 40 from 2026, under 50 from 2027, under 60 from 2028, and all such mothers from 2029
The exemptions generally apply to income from work, and further conditions apply.
Tax payment and tax returns
The employer withholds the tax advance from wages and pays it to the tax authority (NAV). The employer files the monthly payroll return by the 12th day of the following month. Individuals file their annual tax return by 20 May of the following year. For most taxpayers, NAV prepares a draft return, which is deemed filed if the taxpayer does not amend it. Any difference between the final tax and the advances withheld is settled with the annual return.
Social security contributions
Employees pay an 18.5% social security contribution on their income subject to contributions:
- 10% pension contribution
- 7% health insurance contribution (4% in-kind, 3% cash benefits)
- 1.5% labour market contribution
The employer withholds the contribution and reports it in the monthly payroll return.
Taxes and contributions borne by the employer
Social contribution tax
The employer pays a 13% social contribution tax on the gross wage. Allowances are available for employing certain groups, e.g. labour-market entrants, mothers returning to work after childcare benefits, persons with reduced work capacity and researchers. The tax is reported and paid by the 12th day of the following month.
Rehabilitation contribution
Employers with more than 25 employees on average must pay a rehabilitation contribution if persons with reduced work capacity make up less than 5% of their staff. In 2026, the contribution is HUF 2,905,200 per missing person per year, which is nine times the minimum wage. Advance payments are made quarterly.
Fringe benefits and cafeteria systems
The cafeteria rules were tightened considerably in 2019. Many former preferential benefits are now taxed as ordinary wages, for example meal vouchers, local travel passes, school-start vouchers and contributions to voluntary funds. Today, the main preferential benefit is the SZÉP card:
- annual limit of HUF 450,000, plus HUF 120,000 on the separate “Aktív Magyarok” (sports) sub-account
- tax burden of 33.04% of the benefit (15% personal income tax and 13% social contribution tax, each on 118% of the value)
The same 33.04% rate applies to certain specified benefits, such as small gifts worth up to 10% of the minimum wage, three times a year. Some benefits remain tax-free up to statutory limits, for example tickets for sports and cultural events, and housing support for young employees under certain conditions.
For comparison, of the employer’s total cost, about 59% reaches the employee as a net wage, compared with about 75% for a SZÉP card benefit.
Employers usually set up cafeteria rules: the employer defines the menu of benefits and an annual budget, and employees choose the items that best suit their needs. We are happy to help design and administer such systems; see our cafeteria software and services.
