In a bid to expand Hungary’s family-friendly tax system, the Hungarian government is planning to double the family tax allowance, extend tax exemptions for young and multi-child families, and prolong the reduced VAT on housing, the Ministry of Finance announced on Wednesday.
As reported by Magyar Nemzet, the ministry outlined that next year’s tax amendments, expected to be submitted to parliament soon, will focus on expanding benefits for families, streamlining tax administration, and measures to further counteract the shadow economy.
The proposed family tax allowance increase will take place in two stages if supported by the national consultation, the government said. Starting on July 1, 2025, families with one child will see a monthly tax allowance of HUF 15,000, while two-child families will receive HUF 30,000, and families with three or more children will receive HUF 49,500 per child. A further increase, effective Jan. 1, 2026, would raise these amounts to HUF 20,000, HUF 40,000, and HUF 66,000, respectively.
In addition to these family tax adjustments, the government plans to extend the current reduced VAT rate of 5 percent on new residential properties by two years until Dec. 31, 2026, offering further relief to families and support to construction businesses. Under certain conditions, the discounted rate could be extended until 2030.
The government has also proposed allowing pension fund savings to be used for housing loan repayments, renovations, and home upgrades from next year. In addition, Hungarians could potentially use up to 50 percent of their Szép card balance — a popular benefit card provided by employers to employees — for housing-related expenses.
Additional measures include tax relief for users of agricultural diesel fuel. This will allow farmers to reclaim excise taxes on diesel used for agricultural activities, including on green fields and fallow land.
The government also confirmed that special taxes on pharmaceutical manufacturers and telecommunications will be lifted by the end of the year.
The ministry’s announcement emphasized Hungary’s focus on lowering taxes, supporting families, and simplifying tax structures.
Over the past decade, Hungary has reduced labor taxes more significantly than any other EU nation, a move, the ministry claims, has helped to create a highly competitive tax system and encouraged record foreign investment in the country.
