Family tax relief and the 2026 tax package

This week has seen a veritable tsunami of tax legislation, as on 12 May 2025, the Hungarian Gazette announced laws on tax breaks for mothers under 30, mothers raising two or three children, and infant care, childcare and adoption allowances. In addition, on 13 May, the T/11920 bill amending tax laws to the National Assembly. The most important provisions concerning tax relief and the most relevant details of the spring tax package are briefly presented below.

The family tax reduction programme

As part of the family tax reduction programme, four new laws were enacted this week, with which the Government aims to further strengthen the financial security of families raising children. The regulation will be introduced in several stages in the form of tax base reduction allowances.

Act XVI of 2025 on discounts for infant care allowance, child care allowance and adoption allowance exempts benefits received during the initial period of child rearing from personal income tax. The discount is equal to the total amount of these benefits. It is important to note that if an individual receives multiple types of benefits simultaneously, the discount can be applied to each benefit. The provision already applies to infant care allowance (CSED), child care allowance (GYED) and adoption allowance paid after 30 June 2025. No social security contributions or pension contributions are payable on CSED and adoption allowances, so with the introduction of tax exemption, beneficiaries receive the full amount of these benefits without any public charges. With the tax exemption of GYED, this benefit is now only subject to a 10 per cent pension contribution.

Act XV of 2025 on benefits for mothers raising three children introduces new benefits for mothers raising three children under conditions identical to those currently in force for mothers raising four or more children. The law determines who is eligible based on entitlement to family allowance, with detailed rules.

The discount is a tax base reduction discount under Act CXVII of 1995 on personal income tax (hereinafter: It can be deducted from the consolidated tax base in accordance with the Personal Income Tax Act (Szja tv.): The law sets out a detailed list of deductible income, typically earned through work. This includes, in particular, income from employment, contract work, self-employment and primary agricultural production.

Other income not earned through work, such as income from property rentals and capital gains, is not taken into account for the purposes of the allowance.

Mothers of three children will be able to claim tax exemption from 1 October 2025 on income earned after 30 September 2025, and in the case of income from employment, on income accounted for after 30 September 2025.

Act XIV of 2025 on tax relief for mothers raising two children introduces a tax base reduction for mothers with two children, similar to the provisions described above. In their case, too, the eligible person must be determined on the basis of entitlement to family allowance.

The deductible income is the same as in the rules for mothers raising three children. However, the discount for mothers raising two children will be introduced in four stages: From 1 January 2026, mothers who have not yet reached the age of 40, from 1 January 2027, mothers under the age of 50, and from 1 January 2028, mothers under the age of 60 will be exempt from personal income tax. Full lifetime exemption for mothers of two children will be fully implemented from 1 January 2029.

Act XIII of 2025 on benefits for mothers under 30 amends the rules of the previously introduced benefits. Its aim is that, from 1 January 2026, all mothers under the age of 30 will enjoy tax exemption on their earned income, regardless of the date of birth of their child and without any income limit. For the purposes of this Act, a mother under the age of 30 is defined as a woman under the age of 30 who is expecting a child and who is entitled to family benefits under the Personal Income Tax Act in respect of her unborn child, biological child or adopted child until the day before she reaches the age of 30. The law also specifies the deductible income in the same way as in the rules applicable to mothers raising two or three children. The discount (under the new, more favourable conditions) applies to income earned after 31 December 2025 and, in the case of income from employment, to income accounted for in the period after 31 December 2025.

The spring tax package

In connection with the extension of tax breaks, the 2026 tax package envisages further amendments. Bill T/11920 on certain tax obligations and amendments to certain tax laws (submitted on 13 May) aims to further reduce taxes and simplify administration, as well as to elevate emergency legislation to the level of law. From the provisions affecting virtually all types of tax, we would highlight the following.

New measures to assist families with children (tax exemption for childcare allowances and adoption fees, lifetime tax exemption for mothers with three or two children, tax exemption for childcare allowances and adoption fees, lifetime tax exemption for mothers with three or two children, tax exemption for childcare allowances and adoption fees, childcare allowance and adoption allowance, lifetime tax exemption for mothers with three or two children, tax exemption for mothers under 30) it is necessary to amend the relevant legislation, for example by specifying the order in which the allowances are to be applied in the Personal Income Tax Act.

The extension of tax breaks also justifies a change in the social security contribution rules. In order to prevent future abuses, the following provision is also expected to be introduced. The rules stipulating exemption from social contribution tax for private individuals who are pensioners in their own right [Szochó tv. 5. Notwithstanding Section (1), the payer providing income to the same retired individual who is entitled to a personal income tax allowance (effectively tax exemption) depending on the number of children shall be liable to tax if the total amount of income paid to the same individual in the tax year exceeds four times the average annual income and the payer would otherwise have to deduct tax in advance on the income paid (e.g.: salary, income from contractual employment). When applying this rule, related companies that provide income to the same individual shall be considered as a single payer. Social contribution tax liability arises for self-employed persons who claim the mother’s allowance (e.g. sole trader, primary agricultural producer) to retired individuals if the total amount of their income for the current year, which forms the basis for the maternity allowance (for mothers of four or more children, three children or two children) exceeds four times the average annual income for the year in question, provided that this income does not come from a payer or, if it does come from a payer, the payer has not paid the income tax specified in the Personal Income Tax Act. 46. Pursuant to paragraph (4), no tax advance shall be determined.

A significant part of the tax package is that it maintains the provisions on extra profit taxes. Among other things, it provides for the taxation of extra profits under 197/2022. (VI. 4.) Raising the provisions on special bank tax under the government decree to the level of law. The elevation to statutory level does not affect the content of the provisions relating to 2025. Based on the amendment, the obligation imposed on credit institutions and financial enterprises will remain in place in the tax year beginning in 2026.

In order to support small businesses, the provisions of the government decree, which previously increased the value limit entitling businesses to opt for subjective tax exemption to HUF 18 million, will also be elevated to the level of law.

Given that the content of the bill may still change, we will send a detailed newsletter for your information after the legislation has been promulgated.