Tax reductions from 1 January 2022
Mihály Varga, Minister of Finance of Hungary has introduced many changes in tax legislation as of 1 January 2022 with an estimated HUF 750 billion to be left at the private sector. According to the statement of the Minister, tax reductions became achievable, as the economic growth of Hungary rose over 6,1%.
The greatest change is the reduction of the Social Contribution Tax, that is going to be lowered to 15% from 17.5% and the abolishment of vocational training contribution (that was previously 1.5%). The Small Business Tax is also lowered from 11% to 10%, while the amount of the Local Business Tax still remains at 1% for the year 2022. These reductions were asked from the representatives of small businesses, as they argued that it would be extremely difficult for them to cover the increased minimum wage from 1 January 2022.
The Hungarian Government also launched a programme for young employees under the age of 25, which will exempt employees under the age of 25 from personal income tax from 1 January 2022. According to official calculations, the wage of an average 20-year-old would increase with more than EUR 1,300 yearly. This advantage is expected to draw more of the younger generation to the labour market.
According to the Minister of Finance, these changes should further facilitate economic growth and investments from abroad, as the burden on families, employees as well as on employers are lowered drastically since 2010.