The effects of the increase in the minimum wage in 2022
According to the government's announcement on 3rd of November 2021, from 1st of January 2022, the gross amount of the monthly minimum wage will be HUF 200.000, and the guaranteed minimum wage will be HUF 260.000.
An increase in the minimum wage will lead to an increase in a number of related benefits and discounts.
The benefits linked to the minimum wage are the followings:
• the job seeker’s allowance - the maximum daily amount of the mandatory minimum wage can be, which is currently HUF 5.580 per day, and by raising the minimum wage, those affected can receive HUF 6.666 per day;
• sickness benefit –60 per cent of the average daily wage, but this amount cannot be more than one-thirtieth of twice the minimum wage, which is currently HUF 11.160 per day and by raising the minimum wage will be HUF 13.333 per day;
• child care fee (GYED) - 70 per cent of the parent's previous income, but not more than 70 per cent of twice the minimum wage. The maximum amount of the benefit is currently HUF 234.360, which will increase to HUF 280.000 by raising the minimum wage;
• grandparent’s child care fee - the rate is 70 per cent of twice the minimum wage, so the benefit will increase from the current HUF 234.360 to HUF 280.000 by raising the minimum wage;
• the graduate degree’s child care fee - available to students of higher education institutions, the rate is 70 per cent of the minimum wage in the case of undergraduate education and 70 per cent of the guaranteed minimum wage in the case of participants in master's education. Thus, the amount of this will increase from the current HUF 117.180 to HUF 140.000 in the case of the current undergraduate education, and will increase to HUF 183.930 instead of the current HUF 153.300 in the case of the master's education.
• maternity benefits (CSED) in special case - in the event that there is no 120-day continuous insurance relationship, the daily maximum of the maternity benefit may be one-thirtieth of twice the minimum wage, which is currently HUF 11.160 per day, will be HUF 13.333 per day
In addition to these, the amount of the personal allowance is also a tax allowance tied to the amount of the minimum wage. Workers who are entitled to benefit from Government Regulation of 335/2009 on severely disabled diseases are entitled to the personal allowance and who receive an invalidity allowance or disability allowance. The amount of the personal allowance is one third of the minimum wage per eligible month, rounded to the nearest 100 HUF. This currently means a monthly tax saving of HUF 8.370 and an annual discount is HUF 55.800. By raising the minimum this amount will increase to HUF 10.005 per month, and on an annual basis we can speak of a tax base discount of HUF 66.700.
The contribution allowance for the employment of people with altered working capacity is also tied to the minimum wage, the amount of the allowance is equal to 100% of the tax base, but not more than twice the minimum wage SZOCHO.
18 November, 2021
The expert team of VGD Hungary is at your disposal in case of any questions.
This newsletter provides general information and does not constitute tax advice.
