Hungarian MPs decide on important tax laws

The Hungarian parliament has decided on important tax laws:

Family allowance

The amount of family allowance has not changed significantly for a decade and a half, with the last significant increase in 2006. The family allowance is paid from birth until the child is enrolled in a public education or vocational training establishment. The upper age limit is 20 years.

MPs approved increases to tax allowances for families raising children in a vote in parliament on Tuesday. The tax allowances will rise by 50pc from July 1, 2025 and by another 50pc from January 1, 2026. The measure was part of a package of tax changes approved by lawmakers, who voted 114 for it, 42 against it, and 8 abstentions.

Home purchases

The legislation also allows Hungarians to tap their voluntary pension fund accounts for home purchases or renovation during the 2025 calendar year and raises the threshold for tax preferences on employer housing support by HUF 1.8m a year for employees under 35. SZÉP voucher card holders may apply up to half of the top-ups to home renovation expenditures.

New home builds

The legislation extends the 5pc preferential VAT rate on new home builds until the end of 2026, or until the end of 2030 for projects still under construction.

Short-term rentals

The package will raise the room tax on short-term rentals in the capital to HUF 150,000/year. As the owners of the so-called AirBNB flats are Hungarian families, they will be hit hard by this five-fold increase in tax. As we wrote n yesterday, Hungary’s parliament approves workers’ credit and short-term rental permits in Budapest

UPDATE

State Secretary: Government to double tax allowance for families raising children

Tax allowances for families raising children are set to double in line with the tax changes parliament approved in a vote on Tuesday, the state secretary for family affairs said.

“The political left however did not support Hungarian families this time either, they did not vote in favour of doubling the tax allowance that families with children are entitled to,” Zsófia Koncz said on social media in reaction to the vote.

Under the legislation, the tax allowance will increase for families with one child to 15,000 forints (EUR 37), to 30,000 forints with two, and 49,500 with three or more as of July 1 next year, Koncz said. In a phase to follow on January 1, 2026, the allowance is set to reach 20,000 forints per one child, 40,000 forints per two and 66,000 forints for families with three or more children, respectively.