Hungary plans to reduce personal income tax for minimum wage earners from 15% to 9% in 2027, while increasing taxes on large companies and introducing a wealth tax expected to generate HUF 200 billion annually.
Prime Minister Péter Magyar’s first full-year budget also includes HUF 677 billion in public sector pay increases and aims to narrow the fiscal deficit to 4.9% of GDP, down from an estimated 7.5% in 2026.
Presenting the government’s fiscal plans to Parliament on October 19, Magyar outlined a combination of tax relief, higher social spending and corporate tax changes intended to improve household incomes while reducing the budget deficit.
Income tax cuts to benefit 2.5 million workers
Under the proposal, the personal income tax rate on minimum wage earnings would fall by six percentage points to 9%, leaving affected workers with approximately HUF 20,000 more each month, or HUF 240,000 annually.
Tax relief would also extend to employees earning less than HUF 680,000 gross per month, with progressively smaller reductions at higher income levels. The government estimates that approximately 2.5 million people would benefit, saving a combined HUF 250 billion.
Family allowances, which have remained unchanged for 19 years, would double from 2027, benefiting around one million families raising 1.6 million children. The measure would require an additional HUF 300 billion in public spending.
Existing personal income tax exemptions for mothers would remain, but would apply only to the first HUF 1 million of gross monthly earnings. The exemption for workers under 25 would continue up to the average wage.
Public sector wages and pensions receive additional funding
The government plans to allocate HUF 677 billion to salary increases for approximately 603,000 public sector employees. Healthcare workers would receive an average 17% increase, while net wages in the social services sector would rise by 17.8%. Teaching assistants and other education support employees would receive increases averaging 21.5%.
The budget also provides for higher pensions, including an increase in the minimum monthly pension from HUF 28,500 to HUF 120,000, continued 13th-month pension payments and the first instalment of a 14th-month pension.
A new SZÉP benefits card for pensioners receiving less than HUF 500,000 per month would begin its phased introduction in 2027, with HUF 90 billion earmarked for the programme. Healthcare expenditure would increase by HUF 510 billion to HUF 4.604 trillion, including HUF 25 billion for air-conditioning installations in hospitals.
Large companies face higher taxes as government seeks new revenue
To finance the spending measures and support deficit reduction, Hungary plans to increase the corporate tax burden on companies with annual revenue exceeding HUF 180 billion. The effective tax rate for affected businesses would rise to approximately 11%, compared with the current standard corporate tax rate of 9%. Smaller companies would retain the existing rate.
The innovation contribution would also increase to 0.5%, with microbusinesses and small companies remaining exempt. Together, the corporate tax changes are expected to generate HUF 260 billion in additional revenue.
A separate wealth tax would raise approximately HUF 200 billion annually, applying a 1% rate to the portion of individual wealth exceeding HUF 1 billion and 1.5% to wealth above HUF 100 billion. The government also plans higher contributions from energy companies, changes to retail taxation and the gradual removal of mandatory retail markup caps.
EU funding to support transport, energy and housing investment
The proposed budget includes HUF 331 billion in EU funding for transport projects, including the purchase of 35 intercity trains and 42 HÉV suburban railway trains. Another HUF 868 billion would support electricity grid development, battery storage, smart meters and the integration of wind and geothermal power.
Hungary aims to install 3 GW of battery storage capacity by 2030, while a planned housing renovation programme would cover 30,000 homes in 2027 and 120,000 by the end of the decade. The government also intends to mobilise HUF 928 billion in EU funding for business development and public procurement opportunities.
The 2027 budget represents the Magyar administration’s first major fiscal restructuring following its election victory earlier this year. The government is targeting a deficit below the European Union’s 3% threshold by 2030, with longer-term ambitions to adopt the euro in the early 2030s. The proposals remain subject to the parliamentary budget process.
