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Economy & Policy

Youth in Hungary can increase their income by tens of thousands of forints

After mothers raising four or more children, the government will now grant those under 25 an exemption from the personal income tax.

Speaking about the reasons for the planned tax benefit, PM Orbán explained that the gradual restoration of the 13-month pension will help retirees, and the government has launched the largest housing renovation and home building program in Hungary. Now, it is important that young people also get a serious boost, he added. 

The new measure would mean an immediate, significant increase in income for workers under the age of 25 and is set to come into effect next January 2022.

PM Orbán said that the new exemption is planned to extend up to the average salary. 

Calculated with the current gross amount of the minimum wage of HUF 161,000, this means that the deduction rate from the gross wages of young people working full-time would be 18.5 percent instead of 33.5 percent. This would increase their net salary from HUF 107,000 to HUF 131,000.

If the government votes for this new measure, the net salary of young people even with the lowest earnings would be HUF 24,000 higher. Young workers earning the maximum exemption ceiling would be better off by nearly HUF 60,000 a month.

The employment rate of young people across Europe lags behind that of older age groups. According to data from Hungary’s CSO (Central Statistics Office), in the third quarter of 2020, 48.7 percent of 20-24-year-olds (251,000) and 28,000 15-20-year-olds were working. Thus, close to 300,000 young people can benefit from the personal income tax exemption. 

Presently, 55.4 percent of those aged 20 to 24 (approximately 285,000) are inactive, while their unemployment rate is over 12 percent. This new measure would also benefit seasonal student workers in Hungary and help minimize illegal work. 

Source
www.magyarnemzet.huwww.magyarnemzet.hu
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