2027 tax package: impact on pay and family allowance

The planned measures in the 2027 tax package could increase the take-home pay of many employees, as well as the income of households with children. According to government information, personal income tax on the minimum wage would fall from 15% to 9%, while earnings above the minimum wage would qualify for a tapered tax allowance up to a gross monthly income of HUF 680,000. The plans also include doubling family allowance.

For the time being, these amounts should not be treated as guaranteed income in household budgets. The detailed rules may still change, and the full method for calculating the allowance on salaries above the minimum wage is not yet known. The information below is general and does not constitute personalised tax or financial advice.

The change can be estimated most accurately for minimum-wage earners

According to the government announcement, the personal income tax rate on the minimum wage would fall from 15% to 9% from 1 January 2027. Reports by Világgazdaság and mfor say this would save a minimum-wage earner HUF 240,000 a year. Averaged over a month, this is HUF 20,000.

The published annual amount assumes a simplified situation in which the employee receives the minimum wage throughout the year and can claim the allowance in full every month. The actual change in take-home pay may be affected by factors such as part-time work, employment beginning or ending during the year, periods of unpaid leave and the application of other tax allowances.

Tapered allowance may apply up to HUF 680,000 gross

According to government information, people earning more than the minimum wage but no more than HUF 680,000 gross per month could receive a tapered tax allowance. The same announcement refers to nearly 2.5 million employees being affected.

A tapered system does not mean that a uniform 9% personal income tax rate would apply across this entire income range. The allowance may gradually decrease as earnings rise, but the precise phase-out formula is not known. As a result, the monthly increase in take-home pay for those earning above the minimum wage cannot currently be calculated reliably.

For people earning above the gross threshold of HUF 680,000, this measure alone cannot be used to infer an increase in take-home pay. To determine the final outcome, it will also be necessary to clarify how variable pay components, bonuses and income that fluctuates during the year will be treated.

How to plan ahead for take-home pay

Employees can distinguish between three basic situations. For minimum-wage earners, the estimate reported in the press indicates an average monthly increase of HUF 20,000. Those earning above the minimum wage but up to HUF 680,000 gross may also qualify for an allowance, but the individual amount can only be determined once the detailed formula is known.

When planning household finances, it is therefore inadvisable simply to apply a 9% tax rate to every lower salary. A more cautious approach is to list guaranteed current income and any potential future increase separately, then recalculate the budget once the final rules are published.

A separate calculation may be necessary if someone also claims the family tax allowance, personal allowance or any personal income tax exemption. In such cases, the employer, payroll administrator or a tax adviser can determine how the various entitlements interact.

Family allowance would be doubled

According to the government announcement, family allowance, which has remained unchanged for 19 years, would be doubled. The information refers to around one million families and 1.6 million children being affected.

Its practical effect may be simpler than that of the tapered tax allowance: if the eligibility conditions and the household's circumstances do not change, the amount paid under the relevant entitlement could double. However, the family's actual additional income would still depend on the number of children, the family's circumstances and whether it qualifies for the standard or higher rate of benefit.

Family allowance and the tax allowance applied to employment income are two separate entitlements. In the household budget, it is therefore worth listing the expected change in take-home pay and the planned increase in the benefit separately.

Higher-rate benefits may also be doubled

According to a report by Adózóna, the proposed change would also cover the higher rate of family allowance. The publication says the monthly amount payable for a chronically ill or disabled child would rise from HUF 23,300 to HUF 46,600.

According to Adózóna, the monthly benefit paid for a chronically ill or disabled child raised by a single parent would increase from HUF 25,900 to HUF 51,800. As these figures come from a specialist press report, eligible recipients should check the final amount and the conditions applicable to them once the rules have been adopted.

An income limit may apply to mothers' tax exemption

According to an analysis by Portfolio and a summary by Medosoft, mothers' personal income tax exemption would be subject to a gross monthly income limit of HUF 1 million. Based on these reports, the exemption would remain unchanged for eligible people whose income is below the threshold.

For higher earners, the wording of the final provision will determine which types of income must be taken into account and how the calculation will be made. The monthly basic salary alone does not necessarily reflect the annual tax position, particularly where variable pay components or several types of income are involved.

Employers must also prepare

According to reports by Világgazdaság and mfor, Finance Minister András Kármán has submitted the 2027 tax bills and the proposal on pension increases to Parliament. Once the final rules have been adopted, employers will need to incorporate the changes into their payroll processes.

This may not be merely a technical task. Employee declarations, calculations for people starting employment during the year and the payroll of employees entitled to multiple allowances will also need to be adapted to the new rules. Employees should therefore pay attention to information from their employers and check the required declarations.

What should households consider when planning their 2027 budget?

• Separate current and projected income: any additional income from the proposed changes should only be treated as guaranteed once the final rules are available.
• Do not assume a 9% personal income tax rate for every lower earner: according to the announcement, this applies to the minimum wage, while higher salaries are expected to qualify for a tapered allowance.
• Employment income and family benefits are separate items: changes in take-home pay and an increase in family allowance may raise household income under different entitlements.
• Other allowances must also be taken into account: claiming several entitlements together may alter an individual's take-home amount.
• In complex situations, an individual calculation may be advisable: an accountant, tax adviser or payroll administrator can provide an accurate calculation based on the final rules.

The expected change can currently be estimated most accurately for minimum-wage earners: Világgazdaság and mfor reported annual savings of HUF 240,000, or an average of HUF 20,000 per month. Take-home pay may also rise for people earning above the minimum wage but no more than HUF 680,000 gross, although the exact amount will depend on the detailed rules governing the tapered allowance.

For households with children, the planned doubling of family allowance could provide additional income, and Adózóna says higher-rate benefits would also increase. It is advisable to wait for the adopted rules before finalising a revised household budget and, if necessary, to request an individual calculation from a payroll administrator or tax adviser.