Taxation of Labour in Hungary is Near 50% in 2016

When you take home 516 euros a month, but your employer paid 998 – and the difference went to the state – that’s a nearly 50% tax wedge. The income tax is only 15% of it, so be informed before you use Hungary as a poster child of income taxation. 

And that’s the average salary. The minimum wage is just 235 euros in take-home pay. (And no, that’s not enough to pay the rent.)

Flat tax is fine – it is the least distorting to incentives. High taxes are wrong – and not well spent.

Taxes on labour in 2016


Gross average wage  777 EUR
Average wage labour costs – to employer 998 EUR
Employee pays (33.5%)
Net average wage – TAKE HOME PAY 516 EUR
Personal income tax (15%) 116 EUR
Pension contribution (10%) 78 EUR
Social security contribution (7%) 54 EUR
Labour market contribution (1.5%) 11.6 EUR
Employer pays on top of your wage (28.5%)
Employer “social contribution tax” (27%) 210 EUR
Labour training contribution (1.5%) 11.6 EUR


Gross minimum wage  353 EUR
Net minimum wage – TAKE HOME PAY 235 EUR
Non-taxable income N/A (flat tax)
Minimum wage labour costs – to employer 454 EUR
Employee pays (33.5%)
Personal income tax (15%) 53 EUR
Pension contribution (10%) 35 EUR
Social security contribution (7%) 24 EUR
Labour market contribution (1.5%) 5 EUR
Employer pays on top of your wage (28.5%)
Employer “social contribution tax” (27%) 95 EUR
Labour training contribution (1.5%) 5 EUR

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