A summary of changes that companies and employers should be aware of regarding payroll-related taxation (personal income tax, social contribution tax, health insurance, fringe benefits, and minimum wage) starting January 2024.
Minimum Wages in 2024 – How Much Did They Go Up?
Effective December 1, 2023, the new total minimum wage is HUF 266,800 and the guaranteed minimum wage is HUF 326,000. Please see our blog for more details on the regulations that require special attention when calculating payroll and the changes to the minimum wage in 2024.
Regarding minimum wages, it is important to note that after January 1, 2024, these wages will need to be adjusted for January wages and union membership withdrawals, and attention should be paid to the percentage of part-time employment.
Personal Income Tax (PIT or SZJA) Allowance Changes
Allowance for young people under 25
Benefits for young people under the age of 25 may reduce certain income included in the consolidated tax base. Examples include: employment income, commissions, self-employment income, self-employment flat-rate income, and entrepreneurial deductions.
The amount of the allowance in 2024 is 576,601 HUF per month of eligibility, a tax savings of 86,490 HUF, or 6,919,212 HUF for the full year of eligibility, for a total tax savings of 1,037,880 HUF. If an employee is eligible for the young person’s allowance under age 25, the employer or payroll provider will automatically take this into account until the employee files a statement of exemption from some or all of the allowance.
It is important that only those who wish to be exempt from some or all of the allowance should complete the declaration form.
Family Allowance
After January 1, 2024, there will be no change compared to previous years. That is, the applicable total family tax allowance is based on the number of dependents, per month of eligibility, per dependent.
– 66,670 HUF per dependent,
– HUF 133,330 per dependent for two dependents,
– 220,000 HUF per dependent if there are three or more dependents.
After January 1, 2024, the monthly benefit for dependent children with chronic illnesses or severe disabilities will be increased by 66,670 HUF.
Tax benefit for mothers with four or more children (commonly known as NÉTAK).
After January 1, 2024, mothers with four or more children will still have the opportunity to reduce their total taxable income by receiving tax relief. Eligible mothers are biological or adoptive mothers with four children who are eligible for the family allowance, or who have been eligible for the allowance for at least 12 years although they are no longer eligible, or who are no longer eligible due to the death of a child, and who reach the number of children eligible for the above tax credit of four, will The tax credit is available to mothers who have four children eligible for the above tax credits.
The tax exemption does not automatically apply to all types of payments, including real estate rent, dividends, EICSD, and KATA income.
Personal Allowance
The personal income allowance must be considered as an item that reduces the tax base. This means that after January 1, 2024, eligible individuals can reduce their total taxable base by an amount equal to one-third of the minimum wage (rounded to the nearest 100 forints), or 88,900 HUF. The conditions for application remain unchanged.
Tax credit for mothers under 30
After January 1, 2024, young mothers who have reached the age of 25 and who are entitled to a family allowance for their biological or adopted child or unborn child may claim the taxable amount allowance; after December 31, 2022, a tax credit (tax-free) applies to young mothers who become eligible for the family allowance before the day before they turn 30 years old. The amount of benefits for mothers under 30 years of age is capped at the national average gross wages per month of eligibles, with a cap of 576,601 HUF per month of eligibles in 2024, for a tax savings of 86,490 HUF, or 6,919,212 HUF for the full year of eligibility, for a total of 1,037,880 HUF of Total tax savings will be 1,037,880 HUF.
Benefits for mothers under age 30 must be claimed by the employer or payer on the tax return.
Medical Services Contribution
Beginning January 1, 2024, the medical services contribution will be HUF 11,300 per month or HUF 380 per day.
Fringe Benefits in 2024
– With regard to fringe benefits, there will be no change in the preferential utility rates for the SZÉP card after January 1, 2024. For fringe benefits, 28% (social security contributions and personal income tax) will be paid up to the preferential limit (450,000 HUF per year). The portion exceeding the preferential quota is classified as a specific benefit, for which the employer must pay 33.04%.
– SZÉP card benefits: the accommodation sub-account will continue to operate as a single account on the SZÉP card. The tax liability will be adjusted to the recreational quota, which will remain at 450,000 HUF per year. Assistance in excess of the annual recreational quota will be classified as a specific benefit.
– Effective January 1, 2024, payers of fringe benefits and certain defined benefits will no longer be required to assess tax liability for the quarter that includes the benefit month rather than the benefit month.
– After January 1, 2024, nominal gifts may be made to individuals (any individual, not just employees) three times per year, with each gift not exceeding 10% of the minimum wage (i.e., 26,680 HUF after December 1, 2023). The total benefit amount is subject to a 15% personal income tax and a 13% social contribution tax.
Social Contribution Tax, KIVA
– The social contribution tax rate is 13
– KIVA tax rate is 10
Employment Entry Benefits for citizens of non-EEA countries bordering Hungary (Ukraine and Serbia)
As of January 1, 2024, workers of non-EEA nationals working in non-EEA countries bordering Hungary (Ukraine and Serbia) will also receive a labor market entry benefit, supplementing the current standard of only covering workers with Hungarian citizenship.
The benefit amount will be a wage amount not exceeding the minimum wage for the first two years of employment and half the minimum wage for the third year of employment; no SC will be paid for this amount.
Simplified Employment
Effective January 1, 2024, the minimum hourly wage for simplified employment is HUF 1,304. For employment requiring at least higher education or vocational training, the minimum hourly wage is HUF 1,630.
It is important to note that in the case of simplified employment, the employee is also obligated to comply with labor law (e.g., nighttime pay).
The exemption limit (i.e., the maximum amount by which an employee’s income from simplified employment is exempt from personal income tax) remains 130% of the minimum or guaranteed minimum daily wage, so that in 2024 the minimum and guaranteed minimum daily wages will be 15,951 HUF and 19,487 HUF, respectively.
The maximum daily wage paid is twice the daily minimum wage, so in 2024 it will be 24,540 HUF. If the employer pays wages in excess of this amount,
not be considered a cost or expense incurred on behalf of the enterprise.
From January 2024, the public charge for simple employment to be paid by employers will be linked to the minimum wage, which will be HUF 2 700/person/day for casual labor and HUF 1 300/person/day for seasonal agricultural and tourist labor. It should be noted that close attention should be paid to the number of simplified employees to be authorized in relation to the number of employees. It is important that firms carefully monitor the number of expedited employment staff as a percentage of their total workforce.
EKHO, GYED, and GYES Sickness Benefits
– Payer’s EKHO: Payers are exempt from the obligation to pay EKHO.
– The maximum GYED is gross 373,520 HUF.
– The maximum daily amount of sickness benefit is 17,787 HUF (linked to the minimum wage).
– The amount of GYES and GYET is 28,500 HUF gross.
– The amount of the old-age pension is also 28,500 HUF.
Maternity and parental leave
Maternity leave
As of January 1, 2024, fathers are entitled to 10 days of leave in the event of the birth of a child, which must be granted in a maximum of two installments at the time requested by the employee, by the end of the second month following the child’s birth, or in the case of adoption, before the adoption decision is finalized. The worker shall be entitled to receive 100% of the absence allowance for five working days of maternity leave and 40% of the absence allowance from the sixth working day.
Parental Leave
Effective January 1, 2024, employees are entitled to 44 working days of parental leave until the child reaches the age of three. The condition for taking parental leave is that the employment relationship has been continuous for one year.
Employees receive a 10% leave allowance for the duration of the parental leave.
After January 1, 2024, parents may decide when to take additional leave for their children. Employers must grant additional leave and parental leave at the time requested by the employee, with the change that employees must notify the employer of their request for leave at least 15 days prior to the start of the leave.
Income Seizure
After January 1, 2024, net income will continue to be considered. That is, HUF 60,000 of monthly income is the portion of monthly income that is not enforceable, and HUF 200,000 is the maximum amount for which wages are fully enforceable.
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