This is how the social security exemption could turn the labor market upside down

By: Trademagazin Date: 2025. 03. 19. 11:00

The complete exemption from personal income tax for mothers with two and three children could have a serious impact on the labor market: while the affected employees could receive significant additional income, the tension caused by the wage gap could place an additional burden on companies. To alleviate this, some companies could respond by freezing gross wages or reducing working hours in order to avoid a further increase in the net wage gap. Regardless of all this, the expansion of part-time employment could also bring about a positive change, since its rate in Hungary (4%) is still significantly below the EU average (17.8%).

Cooperatives for mothers with young children could also be a flexible solution for those receiving childcare benefits, but certain legal interpretations prevent parents receiving childcare benefits from returning to their previous jobs in this form – points out Dénes Rajmund Roland, head of the Human Centrum Labor Rental and Mediation Kft.

The government announced that it will soon submit a bill to the National Assembly, according to which mothers will be exempt from paying personal income tax for the rest of their lives, and this will be gradually introduced according to age. In December 2024, the gross average salary of full-time employees was 727,700 HUF – at this salary level, mothers receiving tax benefits can earn a net income of 109,155 HUF higher per month. Not to mention mothers working in management positions, who – with gross salaries of millions or more – can take home several hundred thousand more HUF per month.

This is the difference between the tax exemption for mothers and the tax benefit for those under 25

While the tax exemption for those under 25 is valid up to a certain amount, according to the current government decision, there is no such limitation for mothers with two and three children, and it covers a very wide group. The amount of the tax benefit will be independent of how much the mother earns, and an important change is that the new legislation will also apply to existing children.

“As in the case of those under 25, we can expect that a tax break promising significant financial support for higher-income employees may encourage mothers to start working, but at the same time it may pose quite a few challenges for HR departments. After all, in addition to financial matters, flexibility is also an important aspect for mothers, which the home office option alone cannot solve

– points out Dénes Rajmund Roland, head of the Humán Centrum HR service group. According to the expert, in order for mothers to receive real support, many more part-time jobs would be needed.