In Hungary, the government is relying on tax cuts and wage subsidies in 2026 to stabilize purchasing power during a weak economy. In Germany, however, the situation is less beneficial for many households because marginal tax relief is practically offset by higher social security contributions and the increased CO2 tax, resulting in a net loss of purchasing power. (ungarnheute: 02.01.26)
Tax Cuts and Family Support in Hungary in 2026
Oeconomus projects that households will have more than 2 trillion forints at their disposal in 2026, equivalent to approximately 5 billion euros. At the same time, the government plans to provide relief to businesses through lower corporate taxes and reduced bureaucracy. According to the analysis, this will leave companies with an additional 90 billion forints, or about 235 million euros.
The relief will be particularly noticeable for families, as tax breaks will double starting in January. A family with three children will receive an annual allowance of 2.4 million forints, or approximately €6,300. Furthermore, the government will permanently exempt mothers under 30 with one child and mothers under 40 with two children from income tax, thus increasing their net income in the long term.
Minimum Wage, Real Wage, and Relief for Businesses
Simultaneously, the minimum wage and guaranteed minimum wage will be increased in clearly defined stages. The minimum wage will rise by 11 percent to 322,800 forints (€842), while the guaranteed minimum wage will climb by 7 percent to 373,200 forints (€973). Oeconomus therefore expects an average real wage increase of around 5 percent for 2026, as the nominal increases are substantial.
For small and medium-sized enterprises (SMEs), the government is also implementing an 11-point program to reduce corporate taxes. Oeconomus estimates the annual savings at 80 to 90 billion forints, or approximately 209 to 235 million euros, thus improving the financial flexibility for investments and new hires. At the same time, deregulation acts as a second lever, as it is intended to lower operating costs.
Pensions, Allowances, and Lump-Sum Payments
Pensioners will also receive more in 2026, as the full 13th-month pension payment and the first installment of the 14th-month pension will be paid out. In addition, the general pension increase will continue, raising the average pension to over 250,000 forints, which is approximately 652 euros. With this, the government is aiming for stable consumption, as pensions are directly used for daily living expenses in many households.
Pensions, Allowances, and Lump Sums
Pensioners will also receive more in 2026, as the full 13th-month pension payment and the first installment of the 14th-month pension will be paid out. In the public sector, a housing allowance program of 1 million forints net, or approximately 2,600 euros, is being launched for employees in this sector. Furthermore, the state is paying a six-month weapons bonus to members of the armed forces and law enforcement, thus also addressing security-relevant professional groups within the package.
Salaries: Teachers, Social Work, and the Judiciary
The government is continuing salary increases for teachers, and Oeconomus has set a target of nearly 940,000 forints (approximately €2,500) for the average teacher’s salary for the coming year. This puts the government in the spotlight a sector that has been struggling with staffing shortages for years. Higher salaries are intended to increase the attractiveness of the profession.
In addition, there will be a 15 percent salary increase for employees in the public sector, as well as in the social and cultural sectors, effective from the new year. The judiciary will also receive further increases, with total increases between 2025 and 2027 amounting to 48 percent for judges, 89 percent for court clerks, and 100 percent for court staff.
Why Oeconomus opposes tax increases during the crisis
Oeconomus places the program within a European context, as several countries are discussing tax increases or new levies. The foundation cites the sharply increased national debt of recent years as a driving force. Additionally, the economic consequences of the war in Europe and the financing of the war are burdening many households.
The underlying logic remains simple. According to Keynes, it follows a clear pattern: Higher taxes reduce disposable income, and then households spend less. As a result, companies generate less revenue, invest more cautiously, and, if necessary, cut jobs, thus intensifying the recession. Therefore, Keynesian concepts recommend increased spending or lower taxes during downturns, and they accept a limited short-term deficit. Tax increases should only come after the economic upswing, because then the economy can withstand stronger stimulus.