The Impact of the 2026 Minimum Wage Increase on Various Tax Obligations

As of 1 January 2026, the monthly minimum wage increased from HUF 290,800 to HUF 322,800. In parallel, the guaranteed wage minimum also rose, from the 2025 level of HUF 348,800 to HUF 373,200 per month. In this newsletter, we briefly summarize how the changes to the minimum wage and the guaranteed wage minimum affect certain tax obligations.

Personal Income Tax

Personal Allowance

Individuals with severe disabilities are entitled to a personal allowance, which reduces their personal income tax base. The allowance equals one-third of the minimum wage, rounded to the nearest hundred forints. Due to the increase in the minimum wage, the allowance rises to HUF 107,600 in 2026, up from HUF 96,900 in 2025. As a result, individuals claiming the allowance may see their net income increase by HUF 16,140 per month.

Benefits Provided Under Preferential Taxation

The minimum wage amount determines the tax treatment of several benefits:

• Up to three times per year, goods or services with a value not exceeding 10% of the minimum wage—HUF 32,280 from 1 January 2026—may be provided as “specified benefits.”
• Gifts provided at events may also qualify as specified benefits. Their individual value per participant may reach up to HUF 80,700.

Several tax‑free benefits also increase in value as a result of the minimum wage adjustment:

• Flat‑rate cost reimbursement for teleworking employees: up to 10% of the minimum wage → HUF 32,280 per month,
• Tickets or passes to sporting events: up to HUF 322,800 per year,
• Tickets or passes for cultural services: up to HUF 322,800 per year,
• Zoo entrance tickets or passes: up to HUF 322,800 per year.

Flat‑Rate Taxation for Sole Proprietors

Sole proprietors may opt for flat‑rate taxation if their annual revenue does not exceed ten times the annual minimum wage (HUF 38,736,000), or fifty times (HUF 193,680,000) in the case of retail activities. Due to the increase in the minimum wage, the flat‑rate taxation regime becomes available or maintainable at higher revenue levels.

Under flat‑rate taxation, the portion of annual revenue not exceeding half the annual minimum wage is tax‑exempt. The increase in the minimum wage raises this exemption threshold to HUF 1,936,800 in 2026. If annual revenue exceeds this amount, personal income tax is payable only on the excess.

Social Security Contributions and Social Contribution Tax (Szocho)

Employment Relationships

Contribution Base

Employees must receive at least the minimum wage, or the guaranteed wage minimum for positions requiring at least secondary education or qualifications. The entire amount of wages paid constitutes the contribution base, subject to an 18.5% social security contribution, while employers must pay 13% social contribution tax on wages.

For part‑time employees, the minimum base for contributions and szocho is 30% of the minimum wage (HUF 96,840) or 30% of the guaranteed wage minimum (HUF 111,960), even if the actual wage is lower.

Social Contribution Tax Relief

Employers may claim several types of szocho relief:

• For employees in positions not requiring qualifications: 50% relief on the szocho due on wages, up to the amount payable on the minimum wage—HUF 20,982 per month in 2026.
• For labour market entrants: in the first employment year, the full szocho on the minimum wage (HUF 41,964 per month), followed by 50% for the next 6 months (HUF 20,982 per month).
• For mothers with three or more children entering the labour market: full relief for 3 years (HUF 41,964 per month), reduced relief for years 4–5 (HUF 20,982 per month).
• For employees with reduced working capacity or researchers: unlimited-duration relief up to the szocho on twice the minimum wage—HUF 83,928 per month.

Employers with more than 25 employees may also be liable for the rehabilitation contribution if their number of employees with reduced working capacity does not reach 5% of headcount. The annual rehabilitation contribution equals nine times the minimum wage, i.e. HUF 2,905,200 per missing person in 2026.

Commission-Based Legal Relationships

A commission contract becomes subject to social security and szocho if the fee exceeds 30% of the minimum wage. In 2026, this threshold is HUF 96,840 per month (or prorated). If the fee is below this amount, no social security contribution arises (and the individual does not become insured), but the payer must still pay szocho.

New “Long-Term Commission Contract” (from 1 January 2026)

Under the new regulation, social security and szocho are due regardless of the fee amount. Contributions must be paid on the actual fee but at least on 30% of the minimum wage. The payer must declare at the start if the contract is treated as “long‑term,” and coverage continues until the declared termination.

Sole Proprietors and Partners in Partnerships

Sole proprietors and partners must pay social security contributions and szocho on their income earned under these titles, but at least on the minimum wage or guaranteed wage minimum. Thus, the increase in the minimum wage affects them as well.

From 1 January 2026, however, the szocho base is no longer adjusted to 112.5% of the minimum wage—the base equals the minimum wage itself. As a result, minimum szocho payments for low‑income individuals may slightly decrease in 2026.

Szocho on Special Types of Income

Certain capital-income-type revenues (e.g., withdrawn corporate income, some dividends, capital gains) may be subject to szocho in addition to personal income tax.

This liability is capped: szocho is payable only until the sum of such income and the consolidated tax base reaches 24 times the minimum wage (HUF 7,747,200 in 2026).

Examples:

• Individuals earning at least HUF 7,747,200 in wages do not owe szocho on their capital income.
• If they earn only capital income subject to szocho, the tax is 13%, capped at HUF 1,007,136 (13% of 24 × minimum wage).

Interest income is excluded from this cap and may be subject to 13% szocho on the full amount.

Corporate Income Tax (CIT)

Minimum wage changes increase the value of the following tax base–reducing items:

• For students in dual vocational training: 24% of the minimum wage (HUF 77,472) per student per month.
• For employees with reduced working capacity: the wage paid, up to the minimum wage, provided the employer’s average headcount does not exceed 20.
• For microenterprises: the increase in average headcount multiplied by 150% of the minimum wage, provided they had no more than 10 employees in the previous year and have no outstanding tax liabilities.

Minimum wage increases also affect certain tax base–increasing items, such as:

• Year‑on‑year decreases in average headcount, where the increase equals the adjusted decrease multiplied by 150 times the minimum wage × 1.2, capped at the amount of the corresponding allowance previously claimed.
• In simplified employment, any daily wage exceeding twice the daily minimum wage increases the tax base.

Small Business Tax (KIVA)

For KIVA taxpayers, the minimum wage increase modifies the tax base through changes to personnel-related payments: it increases both the upper limit of employee-related allowances and the amount of owner‑related payments included in the tax base.