Based on the legislative amendments to be submitted to Parliament, Hungary’s tax system will undergo changes in several areas from 2026. Some of the measures aim to reduce the administrative and tax burdens on businesses, while others serve family policy and employment objectives or close loopholes that previously allowed abuses. Below is a summary of the most important elements of the 2026 tax rules.
Higher VAT exemption threshold
The decision to raise the VAT exemption threshold will be elevated to the level of an act of Parliament. Accordingly, the turnover limit for VAT exemption will increase from HUF 12 million to HUF 18 million. This change primarily benefits small businesses and sole proprietors, as it allows a broader range of taxpayers to operate VAT-free.
The future of excess profit taxes and special taxes
The rules on special taxes previously introduced by emergency decrees will also be incorporated into statutory law. These include, among others, the banking excess profit tax, the Brent–Ural tax, the insurance surtax, and the retail tax.
At the same time, reductions are being implemented in several areas. The income tax rate applicable to energy suppliers will be reduced from 40% to 31%, which in practice amounts to cancel the excess profit tax in this sector. Water utility service providers will be fully removed from the scope of taxation, thereby supporting investment in the sector.
Incentives for healthcare providers and micro-enterprises
Healthcare service providers (especially general practitioner practices) will benefit from a significant relief as the revenue threshold for exemption from local business tax is increased from HUF 20 million to HUF 40 million.
Employment by micro-enterprises will also be encouraged through the expansion of the employer tax base allowance. The allowance rate will increase from 100% to 150%, while the headcount limit will be raised from 5 to 10 employees.
Corporate tax
A favorable change is introduced for cross-border transformations: a legal successor arriving in Hungary through a cross-border restructuring may declare the participations acquired by its predecessor and thus become entitled to tax exemption on the subsequent sale of such participations.
Tax incentives for R&D activities
Under Act LXXXIII of 2025, the system of tax incentives related to research and development activities will remain in place, particularly in the case of cooperation with universities and research institutes. The maximum amount of the tax incentive is: 100% of eligible costs for basic research, 50% of eligible costs for industrial research, 25% of eligible costs for experimental development.
The specific caps of EUR 25 million, EUR 35 million, and EUR 55 million, as well as the HUF 500 million cap, will continue to apply.
Changes of social contribution tax (szocho) rules
An important amendment also affects the social contribution tax. A 13% social contribution tax will be payable by the employer on gross wages exceeding four times the average wage. In numerical terms, this applies to monthly gross wages above HUF 2.5 million. The legislator’s aim is to close a loophole that had previously enabled abuses.
From 2026 1 January, the minimum base for the social contribution tax payable by full-time self-employed individuals and corporate entrepreneurs will be reduced. Under the new rules, the social contribution tax base (similarly to the social security contribution base) will be at least 100% of the minimum wage or guaranteed minimum wage per month, instead of the previous 112.5%.
Reducing administrative burdens
The administrative burden on sole proprietors will also be reduced, as from 2026 they will no longer be required to file the notification of insured status themselves; this obligation will be fulfilled ex officio by the National Tax and Customs Administration (NAV).
Changes will also affect the frequency of corporate income tax advance payments. The threshold for eligibility for quarterly advance payments will increase from HUF 5 million to HUF 20 million, allowing significantly more businesses to switch from monthly to the less frequent quarterly payment schedule. The new rule will first apply to tax advances declared in 2026; for calendar-year taxpayers, the switch from monthly to quarterly payments may take place from July 2026 at the earliest. Companies paying quarterly advances must settle the corporate income tax advance due for the final quarter of the tax year by the 20th day of the third month of the quarter.
Another significant change is that the thresholds entitling micro-entities to prepare simplified annual financial statements will increase by 20%. The upper limit for annual net revenue will rise from HUF 300 million to HUF 360 million, while the balance sheet total threshold will increase from HUF 150 million to HUF 180 million, enabling more micro-enterprises to take advantage of this simplified reporting option.
Expansion of the conditions for the small business tax (KIVA)
The rules of the small business tax (KIVA) will also become more favorable in 2026 with the doubling of the entry thresholds. Under the new conditions, companies employing up to 100 employees and having revenue and a balance sheet total not exceeding HUF 6 billion will be eligible to opt for KIVA. The exit thresholds will also be raised: companies may remain within the scope of KIVA until the number of employees exceeds 200 or revenue surpasses HUF 12 billion.
Tax changes affecting families
From 1 January 2026, the scope of personal income tax exemptions will be significantly expanded. In addition to mothers raising three children, mothers raising two children will also be exempt from paying personal income tax. The exemption will be extended gradually based on age:
- first to those under 40,
- from 2027 to those under 50,
- from 2028 to those under 60,
- and by 2029 to all mothers raising two children.
At the same time, the family tax allowance will also increase: from 1 July 2025 it was risen by 50%, and by January 2026 the original tax allowance will be doubled.
Lump-sum taxation
For sole proprietors taxed under the lump-sum scheme, the expense ratio of 40% will be increased in two steps: to 45% from 1 January 2026, and to 50% from 1 January 2027. For taxpayers opting for lump-sum taxation, a favorable rule remains in place under which income up to half of the annual minimum wage continues to be exempt from tax. In practical terms (assuming a 45% expense ratio) this means that no personal income tax liability arises on annual revenue of up to approximately HUF 3.5 million.
Conclusion
Overall, the 2026 tax changes focus on supporting small and micro-enterprises, healthcare providers, and families, while introducing stricter rules and clarifications in several areas. The impact of these measures will be felt from 2026 onward, both in business operations and in the tax burdens of private individuals.
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