Tax Reforms Result in EUR 4BN Savings for Families
The Oeconomus Economic Research Foundation has reported that significant tax reforms aimed at supporting families and pensioners could result in up to 1,600 billion forints (4 billion euros) being left in the hands of families.
Prime Minister Viktor Orbán announced these measures in his Annual Policy Review on February 22, with the aim of encouraging childbearing and alleviating food inflation for pensioners. One key provision is the exemption of mothers with three children from personal income tax starting in October 2025. Additionally, recipients of childcare allowance and income tax-free infant care allowance will also benefit from tax exemptions.
The impact of the tax reform is expected to benefit over 1.4 million individuals, including mothers with at least four children and workers under 25 who were exempted starting in 2020. The budgetary impact of these personal income tax exemptions in 2026 is projected to reach 1,240 billion forints (3 billion euros), representing nearly a quarter of the VAT revenue appropriations in the year’s budget.
Furthermore, a VAT refund scheme for around 2.4 million pensioners is set to begin in the latter half of the year. To prevent abuse and ensure fairness, the government will limit the amount that can be reclaimed on basic food items to between 10,000-15,000 forints (25-37 euros) per month. This scheme could reduce the budget’s VAT revenue by up to 432 billion forints (1 billion euros), approximately 5% of the total 2025 allocation.
Through these measures, the state aims to directly support families and pensioners, bypassing retailers and providing financial relief to those in need. The impact of these reforms is expected to have a significant positive effect on the economy and the well-being of Hungarian families and pensioners.
Source: Oeconomus Economic Research Foundation; Featured picture: Pexels
