Hungarian Prime Minister Péter Magyar has put forward a 2027 budget proposal that aims to bring significant changes to the country’s tax and spending landscape. The budget targets a 4.9% deficit of the gross domestic product (GDP) and includes measures such as expanded social benefits, increased public-sector salaries, and additional healthcare funding. Following the announcement, the Hungarian currency, the forint, experienced a strengthening, though it remains uncertain if these gains will persist.
One of the key components of the budget is the doubling of family allowances and an increase in the minimum monthly pension from 28,500 forints to 120,000 forints. The proposal also continues the 13th-month pension and introduces the first weekly payment of the 14th-month pension. To address public-sector compensation, 677 billion forints have been earmarked for salary increases impacting over 600,000 employees, along with 510 billion forints allocated for healthcare, and an additional 64 billion forints for municipal budgets.
The tax measures in the proposal include a reduction in the personal income tax rate from 15% to 9% on earnings up to the minimum wage, effective from January 1. Changes to tax exemptions for mothers introduce an income ceiling of one million forints per month, potentially excluding some mothers over 40 with two children from the benefit.
To finance these initiatives, the government anticipates saving 1,500 billion forints while implementing a new wealth tax expected to generate 200 billion forints. Corporate taxes would also see an increase, with the rate rising from 9% to 11% for companies with annual revenues exceeding 180 billion forints. Additionally, 246 billion forints in savings are projected to come from concession fees.
The budget proposal has sparked criticism, notably from Fidesz politician Balázs Orbán, who argues that the new restrictions could undermine existing family tax benefits. Orbán contends that the changes would lead to some mothers, particularly those over 40 with two children, losing the planned full income tax exemption, and that younger mothers earning above the threshold could face taxation on income beyond the limit. He also suggested that these restrictions were introduced at the behest of Brussels.