While the family tax benefit is being increased from July, eligibility for the tax benefit of mothers of four or more is narrowed down. As a result, payroll specialists need to pay extra attention to calculating taxes for employees this month, while the July take-home-pay of some employees will change in Hungary.

Update to the family tax benefit

The family tax benefit is one of the child benefits relevant to calculating salaries. It works by reducing the tax base of employees, this way increasing the net salary they will receive after taxes are deducted and forwarded to the Tax Authority. The value of the family tax benefit has been the same for almost 10 years, but now it is to be doubled over the course of the next year in two phases.

In the first phase, the family tax benefit is increased from July 1, 2025, as follows:

• HUF 100,000 may be deducted from the tax base after 1 child, leaving up to HUF 15,000 with the family (instead of the previous HUF 10,000)
• HUF 200,000 may be deducted from the tax base after 2 children, leaving up to HUF 60,000 with the family (instead of the previous 40,000)
• HUF 330,000 may be deducted from the tax base after 3 or more children, leaving up to HUF 148,500 with the family (instead of the previous HUF 99,000)

If you want to learn more about how the family tax benefit works, click here.

Scope of NÉTAK narrowed

NÉTAK is the acronym for the tax benefit of mothers of four or more children (“NÉgy vagy Több gyermeket Nevelő Anyák Kedvezménye”), and it gives women life-long exemption from the 15% personal income tax. Eligibility is considered through eligibility for the family allowance: every woman is eligibly who was or has been a recipient of the family allowance for at least four children for at least 12 years for each. (You can read more about NÉTAK here.)

In a recent a update to the law governing personal income tax, however, the definition of family allowance was narrowed to receiving family allowance based on Law LXXXIV of 1998 (see the decree here in Hungarian). As a result, the eligibility for NÉTAK has been narrowed to exclude women who used to receive family allowance based on the previous law. Obviously, this is only relevant for older women, but it still means exclusion from a significant tax benefit.

Possible false alarm

While the wording of the new regulation explicitly narrows the scope of NÉTAK, experts are wondering whether this specification is a mistake. Unless the law is updated over the next few days, however, it will be binding for the July payroll. We will keep an eye out for developments. Watch this space for updates.

Update on July 29: According to HVG and RTL News, the Hungarian Tax Authority and the Ministry of National Economy both confirmed that NÉTAK can be applied the same as before, regardless the change to the law. However, the authorities suggesting that laws should be ignored is another reason for concern.

Is this relevant to your Hungarian business?

The above changes will be relevant to your business only if you have employees who are affected. For them, July payroll tax calculation methods will need to be updated to reflect the new rules. In line with that, the take-home-pay will increase of employees with children, but decrease for some older women. If you have employees in the latter group, you need to watch out for new developments over the next few days, and in the long run you might need to adjust their gross salaries to keep them competitive.

At the same time, the changes will most probably not affect your third-country national employees, since third-country nationals are not eligible for the family tax benefit anyway, while eligibility for NÉTAK, or rather, eligibility for the family allowance based on the pre-1998 law supposes a prolonged stay in Hungary.

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Helpers Finance provides not only accounting and bookkeeping services, but also payroll administration and HR compliance services, with a focus on assisting foreign owners of small and medium-sized businesses. Let us take care of the full scope of administrative tasks for you, so you can apply yourself fully to making your business a success in Hungary.

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Last updated on July 29, 2025.