This is how Hungarians will pay taxes in 2026

Below, Kinga Csepei, a tax expert at RSM, outlines the most important tax changes and explains their practical implications for businesses.

1. Corporate income tax

New tax breaks

Two new tax breaks to incentivise investment were introduced in the autumn 2025 tax package. One supports the elimination of environmental damage and can be claimed for investments with a present value of at least HUF 100 million. This incentive can be claimed over six tax years and a significant proportion of the investment value — up to 70–90%, depending on the company's size — can be deducted. Notably, a notification must be submitted to the relevant ministry before the allowance can be claimed, and it cannot be claimed by a company that caused the environmental damage.

Another new element is the investment development tax credit to ensure clean technology production capacity. This replaces the previous tax credit based on the Temporary Crisis and Transition Framework (TCTF). Based on the Clean Industrial Deal State Aid Framework (CISAF), the new tax credit can be linked to investments that contribute to the green transition, such as battery manufacturing, solar panels, heat pumps and CO₂ capture technologies. Claims can be made for up to 80% of the calculated tax, provided notification is given to the ministry (above EUR 150 million in Budapest and EUR 350 million in rural Hungary, pending European Commission approval).

While both incentives offer significant tax savings, the complexity of the rules means it is advisable to model the tax effects of investments in advance and coordinate them with other forms of support. In a large enterprise environment, additional factors such as the global minimum tax may influence the incentives' actual impact, making comprehensive planning particularly worthwhile for multinational groups.

2. Value-added tax (VAT)

Raising the threshold for VAT exemption

The change to VAT exemption is intended to reduce the administrative burden on micro-enterprises. The increased threshold is expected to significantly improve liquidity for individuals and small businesses, since fewer transactions will be subject to VAT, reducing tax return obligations.

he relevant threshold will be raised in three stages from the current HUF 18 million

• to HUF 20 million in 2026,
• to HUF 22 million in 2027, and then
• to HUF 24 million in 2028.

In 2026, taxpayers may opt for a personal tax exemption if the total annual amount of consideration received or to be received for all domestic sales of goods and services is expected to be less than HUF 100 million in 2025 and HUF 200 million in 2026. This amount is not expected to exceed HUF 20 million in either year.

New mandatory sections added to M forms (domestic recapitulative statement)

In summary reports related to tax returns for the tax assessment period ending July 1, 2026, data must be provided not only on the tax amount transferred to the account, but also on the tax deducted.

Online receipt data reporting

Mandatory receipt data reporting will come into effect on 1 September 2026. Data reporting for manually issued receipts must be completed daily within three days, broken down by tax rates. Data reporting for e-receipts, documents equivalent to receipts issued by e-cash registers and documents equivalent to invoices must be reported to the tax authority at the time of issuance, as has been the case since July 2025.

3. Personal income tax

Family tax allowances

Tax exemption for mothers with three children came into effect on 1 October 2025, and the tax base allowance per dependent will also increase from 1 January 2026. The monthly tax base reduction for one child will increase from HUF 100,000 to HUF 133,340; for two children, it will be double that amount; and for three or more dependants, it will be HUF 440,000. The monthly family allowance for dependants who are chronically ill or severely disabled will also increase to HUF 133,340.

Tax exemption for mothers raising two children will be introduced gradually. In the first stage, mothers under the age of 40 will be exempt from tax from 2026. From 2027, this exemption will also apply to mothers aged 40–50. According to the adopted legislation, tax exemption will apply to all age groups from 2029.

Favorable changes for flat-rate taxpayers

An important element of the autumn tax package is reducing the tax burden on sole traders who pay flat-rate tax. The cost ratio for those applying a 40% ratio will increase in two stages:

from 1 January 2025 to 45%, and

from 1 January 2026 to 50%.

In practice, this change means that entrepreneurs, particularly those in the service sector, can deduct a larger proportion of their income as business expenses. This reduces their personal income tax liability, resulting in direct tax savings.

The amendment primarily helps those who operate at low cost ratios and whose activities are typically based on their own labor/knowledge. For these individuals, the higher cost ratio makes flat-rate taxation significantly more competitive and, in many cases, more favourable than income-based taxation. Entrepreneurs may wish to conduct a preliminary impact assessment, as an increase in the cost ratio could affect the expected advance tax payment.

4. Social contribution

Change for full-time sole traders and partnerships

From 1 January 2026, the multiplier of 112.5%, currently used to determine the social contribution tax base for full-time individual and corporate entrepreneurs in relation to the social security contribution base, will be abolished. Under the amendment, the social contribution base will be set at a minimum of 100% of either the minimum wage or the guaranteed wage minimum.

The advantage of this change is that it will make the calculation of the public levy payable more transparent, and many entrepreneurs may find that the monthly amount payable decreases.

In addition, from 2026 onwards, sole traders paying either flat-rate or business income tax will be required to submit quarterly returns on their social security contribution obligations.

• Accordingly, the taxation law will be amended to eliminate the difference between sole traders who opt for different methods of taxation.
• The quarterly return must show public charges payable, broken down by month.
• The quarterly social contribution tax must be paid by the same deadline as the tax return, i.e. by the 12th of the month following the relevant quarter.

5. Small business tax (KIVA)

From 1 December 2025, the value limits entitling taxpayers to choose the small business tax KIVA will increase, meaning that from 1 January 2026, taxpayers will be able to choose KIVA based on the increased value limits.

• The average statistical headcount will increase to a maximum of 100 from the current 50.
• The revenue threshold will be HUF 6 billion, compared to the current HUF 3 billion, and
• the balance sheet total will also be capped at HUF 6 billion instead of HUF 3 billion.

Based on current data, a number of companies have already exceeded the previous HUF 3 billion threshold, but have not yet reached the HUF 6 billion revenue and balance sheet total thresholds or the 50-employee headcount limit. This may therefore be the first time that KIVA is a realistic option for them. Furthermore, due to changes in the headcount criterion and other indicators, additional companies that were previously excluded from the system due to slightly exceeding the limits may now be eligible.

Those who wish to opt for this form of taxation from 2026 onwards must do so by the end of the year.

Raising the exit threshold to HUF 12 billion from HUF 6 billion means businesses that grow successfully can remain in the KIVA system longer. This makes the scheme more predictable, both as an entry point and as a long-term tax strategy. Regarding exit criteria, the maximum average statistical headcount will increase to 200 from 100.

Another change related to the KIVA Act is that one component of the tax base for personal payments will be modified. Under the current rules, personal expenses attributable to a full-time partner in a partnership are 112.5% of the minimum wage, provided that these expenses are lower than this amount. From 2026, in line with the amendment to the social contribution tax law, the minimum wage will form the basis of KIVA in such cases.

6. Special taxes and other windfall profit taxes

Special retail tax – new thresholds, differentiated effects

Another key element of the autumn tax package is the amendment to the retail tax brackets. The lowest bracket is being completely restructured: the tax threshold is increasing from HUF 500 million to HUF 1 billion, which will exempt thousands of small businesses from paying retail tax.

However, the new tax brackets will benefit more than just the smallest players. The shift in the lower bracket and the modification of the additional steps could result in a reduction in the tax burden for small and medium-sized enterprises, but also for the largest retail chains and platform operators, as the highest tax will only be payable on amounts above HUF 150 billion, rather than HUF 100 billion.

What should taxpayers pay attention to due to changes in the retail special tax?

• The sale of services at petrol stations will no longer be considered retail activity.
• Due to the new, higher bands, advance payments in July and October may result in overpayment.
• Any overpayments can be reclaimed in 2025 using a special form, but no later than the end of the year.
• Any difference between the expected and actual tax bases can be adjusted in the annual tax return.

Special bank tax

From 2026 onwards, the special tax on banks will increase to 8% on the portion of the tax base not exceeding HUF 20 billion and to 20% on the portion exceeding this amount, instead of the previous rates of 7% and 18%.

7. Advertising tax

The advertising tax rate has been 0% since 1 July 2019, a policy that the government has extended year after year. However, contrary to previous practice, the autumn 2025 legislative package only extended the applicability of the 0% rate until 30 June 2026. This means that the advertising tax will be reintroduced in the second half of 2026.

In line with the reversal, the rules for registering for advertising tax will also be amended. Anyone who publishes advertisements and does not have a tax number – typically foreign advertisers – will be required to register within 30 days of publishing advertisements. Failure to do so may result in a significant fine. A significant fine may also be imposed for failing to comply with the reporting obligation.

8. Excise tax

Raise to the excise tax on fuels has been postponed

The inflation-linked increase in excise duty will come into effect six months later, so the expected rise in petrol and diesel prices will be temporarily postponed. The amendment may be beneficial for businesses that are sensitive to logistics and transportation costs.

9. Tax administration, taxation rules

Changes regarding administration

The tax package aims to reduce the burden on businesses and modernise tax administration procedures.

– Automated decision-making and digital procedures

The amendment to Act CLI of 2017 stipulates that the tax authority may conduct proceedings through automatic decision-making if the conditions set out in Act CIII of 2023 on public digital services are met, and if all the relevant data is available without requiring further consideration. This step forward is intended to speed up and make more predictable the procedures of the tax authority, while the substantive review function of the courts of appeal remains unchanged.

– Digitisation of enforcement procedures

The amendment to Act CLIII of 2017 allows the minutes taken during on-site proceedings to be prepared in electronic form and then delivered electronically. This amendment improves the documentability and transparency of enforcement proceedings.

– Fine-tuning of the law on taxation

Several amendments have been made to Act CL of 2017. For example, if a sole proprietorship is suspended, the obligation to file a tax return for the period not covered by the annual return will cease to apply if the suspension covers the entire period. Additionally, the tax authority NAV will have electronic access to real estate registration data, and legal terminology will be clarified.

10. Income tax on energy suppliers (Robin Hood tax)

Tax rate

The income tax rate applicable to energy suppliers will decrease from 41% in 2025 to 31% in 2026.

Tax relief for energy development investments

Businesses will be able to take advantage of a new, targeted tax credit for energy development investments made after 31 December 2025, starting in 2026. The scheme aims to encourage the modernisation of energy production and infrastructure systems, with a particular focus on efficiency-enhancing and environmentally conscious developments.

The tax credit can be claimed in the tax year in which the investment is put into operation, and in each of the subsequent five tax years. In other words, it can be used for a total of six tax years (the base year plus five years).

The upper limit of the discount is made up of several steps.

• The tax credit can be deducted at a rate of up to 80% of the calculated tax, reduced by other tax credits. Therefore, it cannot reduce the payable tax to zero.
• The amount of the credit cannot exceed 50% of the difference between the eligible investment costs and the adjusted depreciation.

The acquisition cost of tangible and intangible assets related to the investment is an eligible cost, provided it is reduced by any non-repayable subsidies received for the project. This means that the benefit can only be taken into account once the company has incurred its own expenditure.

The eligibility criteria include:

• fulfilment of specific technical indicators for the investment; and
• continuous use of the assets concerned for at least five years.

An important compliance requirement is that the NAV must verify the conditions within three years of the tax credit's first use, which is why documentation and performance indicators relating to the investments are particularly important.

While the tax credit can significantly reduce the tax burden, due to the complexity of the rules and the mandatory tax authority audit, it is advisable to carry out preliminary financial and tax planning calculations.

Cover image (for illustration purposes only): Getty Images