Hungary’s government is rolling out the most extensive tax reduction programme in Europe, aiming to provide significant financial relief to families. Minister of Culture and Innovation Balázs Hankó outlined the plan during a televised interview on M1, highlighting that around one million families—including 650,000 mothers with two children and 250,000 mothers with three children—will benefit from the initiative.
Building upon existing policies, the government will now extend lifelong personal income tax (PIT) exemptions to mothers with two and three children. Previously, this benefit was only available to mothers under 30 and those with four or more children since January 2020. The exemption for mothers of three children will take effect in October this year, while mothers of two children will see a phased introduction starting in January 2026. Discussions with family organizations this week will finalize the implementation details.
In addition, the government will eliminate PIT on maternity benefits such as the infant care allowance (CSED) and childcare fee (GYED). This reform is accompanied by a two-stage increase in child tax allowances, with the first phase commencing on 1 July 2025 and the second on 1 January 2026. The monthly tax benefit for families with two children will rise to 80,000 forints, while families with three or more children will receive 198,000 forints per month. Overall, a two-child household will see an additional 130,000 forints per month, while a family with three children will gain 190,000 forints monthly.
Minister Hankó emphasized that Hungary’s family policy is designed to allow families to retain more of their earnings rather than relying on direct government handouts. The overarching goal is to ensure that having children is a financial advantage rather than a burden.
The latest measures complement previous financial support schemes. Over 10,000 people have already applied for job loans, with 5,000 receiving funds. The rural home renovation programme has also been extended to support elderly homeowners. Meanwhile, housing affordability for young people is being reinforced through a 5 per cent interest rate cap on mortgages and a 150,000-forint employer-supported housing allowance.
The government’s commitment to family and social welfare extends beyond direct financial aid. The construction of ‘Diákváros’, a new student city offering 18,000 dormitory places, is expected to significantly increase the availability of affordable housing for students and contribute to stabilizing rental prices in Budapest.
Prime Minister Viktor Orbán’s recently announced measures are anticipated to further strengthen financial security for families while boosting Hungary’s economic stability. These policies reflect the government’s broader commitment to supporting families, enhancing the workforce, and fostering long-term economic growth.
Related articles:
