Tax incentives in Hungary for individuals and companies – 2026

What can actually be used, who is entitled to it, and what makes it “work” legally?

Many people identify Hungary’s tax system with the two most well-known figures: 9% corporate tax and 15% personal income tax. This is indeed competitive within the EU, but in practice, the total tax burden and the net “profit” very often do not depend on the tax rate, but on what benefits, exemptions and tax base reductions  the taxpayer (individual or company) can legally apply.

The logic of tax incentives in Hungary is basically not citizenship-based. Most of the allowances are linked to tax residence, eligibility and actual economic substance, so in many cases they can be used by foreign individuals and foreign-owned Hungarian companies if the conditions are met. The key is not “whether you are a foreigner”, but whether your legal status, the nature of your income and the documentation are suitable.

The following summary presents the most important discounts that are relevant in practice for individuals and businesses, with specific numbers and explanations that make it understandable even to a layman what makes a discount work and what makes it fail.

1. Basic logic: when is a tax allowance “due” to it?

Tax relief is typically a conditional right in Hungary. This means that it is not enough to “hear about it” in order to receive the discount, but eligibility must be proven. The proof is not necessarily at the court level, but it is at the level of the tax authority audit: there must be the appropriate status, the appropriate legal relationship and the appropriate supporting background.

In the case of private individuals, the key question is usually the Hungarian tax residency and the type of income. For example, several allowances can only be applied if the given income is part of the consolidated tax base or if the individual qualifies as a tax resident in Hungary (this is typically related to the 183-day rule or the lifestyle centre).

In the case of companies, the key issue is the actual activity and the fulfilment of the eligibility conditions. In the case of investment and development allowances, advance notification, state aid limits and maintenance obligations for several years often appear, which often makes it impossible to “invent” the allowance afterwards.

In practice, determining eligibility and structuring documentation in advance is often where tax savings are won or lost, which is why professional tax advisory and planning plays a decisive role in using Hungarian tax benefits lawfully.

2. Tax Incentives for Individuals

2.1 Family tax allowance (for children) – with increased amounts from 2026

The essence of the family allowance is that the private individual can reduce his or her tax base for the eligible dependent(s), thus paying less personal income tax. From 2026, the system will operate with increased amounts; in practice, many communications talk about it as a net tax saving.

For example, according to professional summaries, the monthly tax base allowance amounts presented from 1 January 2026 may mean a reduction in the tax base of HUF 133,340 for 1 child, HUF 266,660 for 2 children and HUF 440,000 for 3 children
.Since the personal income tax is 15%, the “visible in money” effect of this is of the order of: 1 child approx. 20 000 HUF/month, for 2 children approx. 40 000 HUF/month, approx. HUF 66,000/month personal income tax savings (the specific result depends on the composition of the income and how the allowance is distributed by the parents).

Layman’s explanation: this is not “extra money”, but means that you have to pay 15% personal income tax on a smaller part of your salary (or other income included in the consolidated tax base), so you will have more net income.

An important practical aspect: if the allowance does not “fit” in the personal income tax (e.g. in the case of low wages), in some cases a part of the unused part can be enforced against social security liabilities; This has detailed rules and limits, typically an accountant/tax advisor can adjust it to the income structure.

2.2 First Marriage Allowance – 24 months, fixed amount tax benefit

The allowance for first marriages is available for 24 months if it is the first marriage of at least one of the parties.

This is a “smaller, but sure” net plus; It is not a life-saving amount, but it will steadily reduce your taxes for 24 months and improve the net income of married couples in a predictable way.

2.3 Personal income tax allowance for persons under the age of 25 – tax exemption with ceiling

The essence of the personal income tax allowance provided for young people under the age of 25 is that in the case of certain incomes, the young person does not pay 15% personal income tax up to the specified monthly maximum. The ceiling is not a fixed figure, but is tied to the gross average earnings published by the Central Statistical Office (in July of the previous year), so it changes from year to year. According to the NAV’s information and professional summaries, for example, in 2025, the basis of the allowance was HUF 656,785/month. By 2026, the press and professional sites mention a value of around HUF 715,765/month in several places as a monthly tax-free ceiling.

If your gross salary is below the ceiling, then the 15% personal income tax practically “disappears” from the salary, so the net increases noticeably. If your salary is above the ceiling, you will have to pay personal income tax on the part above the ceiling.

2.4 Tax credit for voluntary pension and health fund contributions – 20% refund, up to a maximum of HUF 150,000/year

In Hungary, one of the classic advantages of fund payments is that part of the payments  can appear as a personal income tax refund. According to several summaries, the amount of the credit is 20% of the deposit, and the annual maximum is typically HUF 150,000.

If you (or your employer) pay into a voluntary fund, the NAV will “credit” a certain amount to your fund account at the next year’s tax return. Not cash in your hands, but your cash balance increases. Due to the maximums, it is also worth calculating in advance, because above a certain deposit level, the refund does not increase proportionally.

2.5 Rules on the exemption from personal income tax for mothers – changes in 2025–2026

As part of the family support tax policy, several elements of personal income tax exemption affecting mothers have appeared or been expanded. For example, according to professional summaries, mothers with three children may be eligible for the personal income tax exemption for the consolidated tax base from 1 October 2025.
Other elements include the fact that mothers under the age of 30 will be eligible for personal income tax exemption under certain conditions from 2026 according to the eligibility rules.

These benefits can be very strong, but they are typically subject to strict eligibility criteria (age, number of children, type of income, eligibility period), so an individual check is required in each case before someone “builds” a net wage plan on this.

3. Tax incentives and incentives for companies

3.1 Development tax incentive – up to 13 years, with an annual limit of 80%

One of the most important benefits for businesses is the development tax allowance. According to professional summaries, the allowance can typically be applied over a period of 13 years, and in a given tax year it can usually be up to 80% of the corporate tax payable.

It does not mean that “there will be 0% tax”, but that after a major investment, the company can pay significantly less corporate tax for years if it meets all the conditions. Due to the 80% limit, there is typically some tax to be paid, but the difference is still significant.

A new aspect that many people skip: this allowance is also related to state aid rules (subsidy intensity ceiling), so the use of the allowance is often not “just a tax matter”, but also a subsidy policy and documentation issue.

3.2 R+D discounts, not just “science”, but documented development

In connection with R+D (research and development), businesses typically receive an advantage through a reduction in the tax base, and it can also have a relevant impact on certain local tax types. In practice, the point is that the activity actually complies with the concept of R+D and that there is appropriate documentation (project documents, job descriptions, time spent, technical results).

The tax authority does not look at “whether the name of the project is nice”, but whether there is an innovation, whether there is a measurable development result, and whether the accounted costs are really related to this. This is especially common in software companies: development can be R+D, but not all developments are automatically R+D.

3.3 Loss carried forward – tax timing and growth strategy

Loss carryforward is especially important for businesses, because many companies invest in the first 1-3 years, build a market, and only become profitable later. According to professional summaries, it is typically a restriction in Hungary that the loss can typically  be used up to 50% of the tax base in a given year (the details and exceptions of the exact regulation depend on the specific situation).

If the company is “in the red” at the beginning, it is not necessarily lost; You can reduce the tax base for later profits, so you have to pay less corporate tax later. This is important for investors because it gives a more realistic picture of the long-term net return.

3.4 Employment-related benefits – the 13% social contribution tax and targeted relief

On the employers’ side, the most important item is the social contribution tax (social contribution tax), the rate of which is fixed at 13% in international summaries.
In addition, there are targeted benefits for certain groups of workers or situations that can reduce the cost of employment. The detailed rules of these are often modified, and the entitlement is typically linked to the status of the employee and the duration of employment.

A new aspect for 2026: for example, from 2026, the calculation of the minimum social contribution tax base for sole proprietors will change, where  a 100% minimum base will be applied by abolishing the previous 112.5% multiplier tied to the minimum wage/guaranteed minimum wage.
Layman’s explanation: this is not a classic “benefit”, but rather a rule change, which can actually reduce the minimum public charges payable for certain statuses, thus affecting the cash flow.

3.5 Less visible but commercially important facilitations: tax advances and administrative thresholds

Tax planning in businesses is not always done in the classic sense of the word “allowance”. Sometimes the liquidity advantage is that the regulation has reduced the administrative burden. For example, from 2026, according to professional summaries, the threshold determining the frequency of corporate tax advances will increase from HUF 5 million to HUF 20 million, and as a result, more companies will be able to switch to quarterly advance payments, which may provide a liquidity advantage.

Your total annual tax may be the same, but if you have to pay advances less often, more money will remain at the company for operation, investment, and salary. This is often just as much a “profit”, but it is not seen as a tax rate.

4. Intersection of private individual and company: owner, managing director, dividend, salary

Many entrepreneurs are actually both individuals and companies at the same time. In such cases, the point of tax optimization is not to “reduce the corporate tax”, but to how the income reaches the owner: in the form of wages, commissions, dividends, benefits. These are subject to different tax and contribution burdens, and other benefits are available for them.

Layman’s explanation: the same “100 units” of money can give you a completely different net amount depending on the title under which you withdraw it. This is why a good structure is not only about corporate tax, but about the entire “ownership payment model”.

5. Typical mistakes that cause a discount to fail

The practical pitfalls of tax incentives are usually not “big tricks”, but simple, everyday mistakes.

One of the most common mistakes is misunderstanding the eligibility criteria. For example, the allowance for those under the age of 25 is capped and tied to the type of income; If someone thinks that all income is “tax-free”, it is easy to be mistaken.

The second typical mistake is the lack of documentation. In the case of R+D and investment discounts, documentation is not an administrative luxury, but the “price” of the discount. If there is no project description, cost allocation, or performance certificate, the discount becomes debatable.

The third mistake is timing. Certain discounts require prior notification or special measures, and if this is not done, the situation cannot always be saved afterwards.

Most failed tax benefits are not rejected because they are illegal, but because they are poorly documented, incorrectly timed, or unsupported during an audit issues that typically surface during accounting or tax authority reviews.

The tax allowance is a value if it is planned and can be proven

In Hungary, tax allowances for private individuals are typically linked to life situations (family, age, savings), while the tax allowances for businesses are related to activities and economic performance (investment, innovation, employment, long-term operation). The most important lesson is that the discount is not a “country-specific kindness”, but a legal logic: those who meet the conditions and prove it can use it, whether they are Hungarian or foreign.