If you earn the minimum wage in Hungary, your payslip is set to change in January 2027 without your employer paying you a forint more. The government’s 2027 tax bill cuts the effective personal income tax on the minimum wage to 9%, which it says is worth about HUF 20,000 a month to those workers.

That is real money. It is also already on the table in this year’s wage talks. According to Index, unions are asking for a 14% rise in the minimum wage, while employers are offering 4% and pointing partly to the new tax credit as a reason the gross increase can stay small. The question for you, and for anyone setting pay next year, is whether a state-funded tax cut should count as a raise.

What the 2027 tax credit actually is

The measure sits in bill T/929, which amends Hungary’s Personal Income Tax Act (Act CXVII of 1995). The bill’s text was published on the evening of 27 October, and it covers workers whose wages are taxed under Hungarian personal income tax (PIT).

The mechanics are simple at the bottom of the scale and get more technical as pay rises:

• Up to the minimum wage, the credit equals 6% of your wage. That is how the effective PIT rate on the minimum wage drops to 9%.
• Above the minimum wage, the credit shrinks by HUF 60 for every additional HUF 1,000 of gross pay.
• It phases out completely at twice the minimum wage, which Bankmonitor puts at HUF 645,600 a month at current levels. The government describes the ceiling as gross monthly earnings of around HUF 680,000, since the exact cut-off moves with whatever the 2027 minimum wage turns out to be.
• At most 12 eligibility months can be counted in a tax year.

Per the government, its measures reduce the tax burden of 2.5 million people and leave HUF 250 billion a year more with them. Index estimates the credit alone costs about HUF 250 billion, nearly 5% of PIT revenue.

How much you would gain, by gross wage

Bankmonitor ran the numbers on today’s HUF 322,800 minimum wage. A minimum-wage earner would pay HUF 19,368 less tax a month, or HUF 232,416 a year, lifting the net minimum wage from HUF 214,662 to HUF 234,030. The benefit then fades fast: at a gross wage of HUF 400,000 the saving is HUF 14,736 a month, and at HUF 500,000 it is HUF 8,736. Privátbankár calculates that at the median income of HUF 611,429 gross, the credit is only HUF 2,050.

Index, working with Gábor Csaba Germán, vice president of the Association of Hungarian Chartered Tax Advisers, modelled a planned 2027 minimum wage of HUF 374,600 gross. At that level, minimum-wage earners would gain HUF 22,476 a month, or HUF 269,712 a year.

Part-time workers qualify too. In Index’s example, the PIT of a part-time worker earning HUF 250,000 gross would fall from HUF 37,500 to HUF 22,500.

Why the credit is not a raise

Here is the detail that matters for the wage talks. The credit is paid for by the state budget, not by your employer. It changes what the government takes from your gross pay; it does not change what your work costs the company. A gross salary increase is the only part of next year’s improvement that comes from the employer.

On our arithmetic, a 4% rise on today’s HUF 322,800 minimum wage adds about HUF 12,900 gross a month, while a 14% rise adds about HUF 45,200. If the tax credit is used to justify the lower figure, part of the net gain you were promised by the government effectively replaces a pay rise you might otherwise have negotiated.

There is a second reason the two are not substitutes. Because the credit at the minimum wage equals 6% of the wage, a higher gross minimum makes the credit itself bigger. That is why the HUF 374,600 scenario produces a larger monthly gain than today’s level. Gross pay is also the base for social security contributions, so a raise delivered through tax rather than through wages leaves that base where it was.

For employees: what to check before January

• Look at gross, not just net. When a pay offer arrives for 2027, separate the employer’s gross increase from the tax credit. Only the first is a raise.
• Do not fear moving up the scale. According to Bankmonitor, a pay rise between the minimum wage and double the minimum wage never leaves you worse off in net terms, even though the credit shrinks.
• Watch bonuses. Index notes that mid-year bonuses can reduce the credit, so ask how a one-off payment will be taxed in the month it lands.
• If you have more than one employer, Bankmonitor advises looking into the employer declaration in January so the credit is applied correctly.
• Know where you gain nothing. Workers under 25 already pay no PIT, so the credit brings them no benefit. It also cannot be applied to the 9.5% PIT portion of ekho (the simplified public contribution scheme), according to Privátbankár.
• Check family exemptions. Index calculated that a two-child mother earning HUF 500,000 a month would get a credit of just over HUF 8,000 yet take home about HUF 66,000 less than this year. If you claim mothers’ exemptions, model your own 2027 payslip rather than assuming you come out ahead.

Running your expected 2027 gross through a salary calculator is the quickest way to see what the credit is worth to you and how much of any offer is genuinely new money. If you are heading into a salary negotiation, that split gives you a concrete figure to discuss.

For HR and payroll teams: implementation and the bargaining question

Index reports that employers will apply the credit automatically, so the operational load lands on payroll. Because the credit tapers with gross pay, it has to track each month’s earnings, and Index notes that mid-year bonuses can reduce it. Multiple-employer cases need particular care, because the credit is capped at 12 eligibility months a year and workers will be relying on the January declaration to get it right.

On pay, the credit gives employers a talking point but not a cost saving. Organisations that lean on it to hold gross increases at 4% may close a deal faster, yet they also attach their name to a raise the state is funding. For low-wage staff who can see their gross pay barely move, that is a perception risk worth weighing alongside retention. Teams that communicate the two components separately (employer increase versus tax credit) tend to avoid the backlash that follows when employees discover the difference on their own.

The same tax package also raises the rehabilitation contribution for companies with at least 250 employees that miss the quota for employing people with reduced work capacity, another line for 2027 budget planning.

The 2027 tax credit is a genuine net-pay gain for low earners, largest at the minimum wage and gone by twice that level. What it is not is a substitute for a gross raise, and the outcome of the current minimum-wage and collective agreement talks will decide whether workers get both or only one. If you know your gross pay and how it compares with similar roles, you are in a far better position to tell the two apart.