Expected changes in Hungarian taxation as of 2022, personal income tax refund to families with children

Extended loan moratorium, tax return for families, exemption for personal income tax for young adults under 25, new pension premium are the most important tax changes in connection with the central budget as off 2022.

The Hungarian Government has decided to extend the moratorium on loan repayments for vulnerable borrowers until 30 June 2022. Based on the decision, pensioners, families expecting and raising children, public workers and people whose incomes have fallen compared with last year will be eligible for continued participation in the moratorium from November 2021.

By 15 February 2022, the Government will refund a portion of personal income tax to parents raising children. Those who perform work within the framework of employment relationship will get back the full amount of the personal income tax paid in 2021. The maximum amount of the refund is the 15% of the average annual salary. The entrepreneurs will also benefit from the refund; KATA taxpayers will receive a quarter of their flat-rate tax, while EKHO taxpayers will receive the 9.5% of the tax paid.

The tax authority will transfer automatically the refund to the employees, provided that it has all the information necessary for determining the amount of the refund. Otherwise, the taxpayers (especially the entrepreneurs) shall make a declaration before 31 December 2021. The tax authority will transfer the tax refunds before 15 February 2022.

People below the age of 25 will be exempted from paying the personal income tax, while in early 2022 military and law enforcement personnel will get a special allowance for six months. Approximately HUF 720,000 per year of saving can be realized due to tax exemption for a 20-year-old entrant with current average wage.