Tax brackets in Hungary
Hungary does not have a progressive tax system, so it doesn’t really have tax brackets. However, it offers various tax benefits and preferential tax regimes that are available under certain income limits. Read on to learn about these.
What are tax brackets?
Tax brackets are relevant in progressive tax systems, where tax rates depend on income. Typically, people and businesses with higher income pay taxes at a higher rate. Tax brackets are the divisions determining which tax rate will be applied to someone’s income.
In Hungary, most tax rates are fixed. Standard corporate tax is 9%, and personal income tax is 15%. However, there are various preferential tax regimes available to businesses, while individuals can apply for tax benefits, and these are often tied to revenues.
Corporate tax
TAO, the standard corporate tax in Hungary is 9%. This is a profit tax, so it is paid not after the revenue of the business, but after whatever is left following the deduction of costs. The standard corporate tax may be applied up to a yearly revenue of EUR 750 million.
Above the EUR 750 million revenue limit, a 15% tax rate applies in line with the requirements of the Global Minimum Tax. This is mostly relevant to international corporations and their affiliates or subsidiaries. Most Hungarian companies do not pass this threshold, especially if they are standalone businesses. Moreover, Hungary has been granted the QDMTT Safe Harbour status, meaning that corporations subject to the Global Minimum Tax may enjoy simplified procedures.
Additionally, if the yearly revenue of a company is below HUF 3 billion (ca. EUR 7.3 million in early 2025), they may choose to pay their taxes according to KIVA (the “Small Business Tax” of Hungary), which is an alternative to the standard corporate tax. The KIVA tax rate is 10%, but the tax base is calculated differently: it is determined by staff expenses and dividend paid rather than the profit. If you want to see whether KIVA or the standard corporate tax is better for your Hungarian company, check out our calculator here.
As a result, the following tax brackets may be defined:
| Yearly revenue | Tax rates / regimes |
| Below HUF 3 billion (ca. EUR 7.3M) | KIVA (10%) or TAO (9%) |
| Below EUR 750 million | TAO (9%) |
| Above EUR 750 million | Global Minimum Tax (15%) |
Local business tax
Hungarian municipalities may tax locally operating businesses up to 2% of their net income. This local business tax depends entirely on the municipality. You can set up a business in an area where this tax is waived, but that might create various administrative burdens that might eat the savings achieved.
If the yearly revenue of a business is below HUF 25 million (ca. EUR 60,000), businesses are allowed to pay their local business tax in tiers instead of calculating it precisely, this way achieving substantial savings. The below table lists the maximum tax payable for each tier because the actual tax will depend on the local tax rate.
| Yearly revenue | Tax base | Max. tax |
| Below HUF 12 million | HUF 2.5 million | HUF 50,000 |
| Between HUF 12 and 18 million | HUF 6 million | HUF 120,000 |
| Between HUF 18 and 25 million | HUF 8.5 million | HUF 170,000 |
VAT free operation
VAT or value added tax is a tax on consumption, added to the net price of goods. As such, VAT is collected by the seller and forwarded to the Tax Authority. At the same time, if your business is a VAT subject, you can reduce the payable VAT with the VAT content of things purchased by and for your business. VAT related administration is complex, and requires a skilled accountant.
Businesses with a yearly revenue below HUF 18 million (ca. EUR 44,000) may choose not to become VAT subjects, however. This is most beneficial to small businesses and freelancers, especially if they are dealing in services rather than goods, since that way they are not buying anything from which they can reclaim VAT anyway. By not being subject to VAT, your business can offer better prices to clients and save on administration.
Self-employment
There are various forms of self-employment in Hungary. The standard option is available regardless of revenues, while the preferential options may be applied only under certain revenue caps. You can learn more about them here.
If you apply the standard tax regime to self-employment, you will have to pay exactly the same taxes as if you had a business and an employee.
If your yearly revenue is less than 10 times the yearly minimum wage, which is HUF 34.896 million in 2025 (or, in case your main activity is retail trade, less than 50 times the yearly minimum wage, which is HUF 174.48 million), you can choose flat-rate taxation. Then you will not have to pay the 9% entrepreneur personal income tax. Moreover, you do not have to pay the 15% personal income tax up to half the yearly minimum wage (HUF 1,744,800), and neither the 18.5% social security contribution nor the 13% social contribution tax if you are freelancing as your second job.
If your yearly revenue is below HUF 18 million and your customers are all natural persons (as opposed to businesses), you can also choose the KATA tax regime. In this case, you will only have to pay the monthly HUF 50,000 KATA tax and the local business tax.
As a result, tax brackets for freelancing may be determined as follows:
| Yearly revenue | KATA | Flat-rate taxation | Standard |
| Below HUF 18 million | yes | yes | yes |
| Below HUF 34.896 million | no | yes | yes |
| Below HUF 174.48 million | no | only if the main activity is retail trade | yes |
| Above HUF 174.48 million | no | no | yes |
Personal income tax
Personal income tax in Hungary is 15%. It is applied regardless of income, so tax brackets are not relevant. At the same time, various tax benefits are available that can reduce or even waive this tax, increasing the net salary significantly. You can learn about personal income tax benefits in detail here.
The most important personal income tax benefits are listed below.
Available to everyone:
- Tax benefit for the mother of four (NÉTAK)
- Tax benefit of mothers under 30
- Disability benefit
- Family contribution benefit
- EKHO for employees in creative professions
- Fringe benefits
- Healthcare and pension funds
Available to everyone but certain third-country nationals:
- Tax benefit for employees younger than 25 years
- Tax benefit of newlyweds
- Family tax benefit
Tax brackets and preferential tax regimes
As you can see, while in Hungary it makes more sense to talk about revenue caps for preferential tax regimes than about tax brackets. These preferential tax regimes are supposed to support relatively small businesses, and to mitigate tax fraud by offering reduced administrative and financial burdens to low-income businesses.
Our team at Helpers Finance focuses on working with small and medium-sized businesses, offering advisory services as well as bookkeeping, payroll administration, and HR support. If you need help with starting your business in Hungary or with taking a new step toward success, feel free to contact us and ask about your options.
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