Hungarian Prime Minister Viktor Orbán announced unprecedented tax cuts in his state-of-the-nation address last week while presenting the government’s plans for 2025. Most of the new measures are meant to help families raise more kids, with the most important new element being the expansion of the country’s unique lifetime tax exemption from mothers of four to those with three and two children.
Hungarian mothers with three children will be given lifetime income tax exemption from October this year, while the same will be gradually expanded to cover mothers with two kids starting January 2026. These measures are estimated to affect 250 thousand families with three children, and another 600 thousand raising two.
There will only be more births if the mothers feel financially secure, Orbán said, adding that Hungary would have at least two hundred thousand fewer births since 2010 if it wasn’t for the Fidesz government’s generous family policies.
Apart from the mothers’ tax exemption which is unique in the EU, Hungarian families can also deduct a certain amount from their taxes, similarly to many other countries.
Orbán, however, also announced the doubling of the amount of these deductibles later this year, increasing the monthly amount parents can write off their taxes to €50 euros after one child, €200 after two, and €500 after three children. In addition, all types of allowances and childcare benefits linked to parental leave will also become tax-free.
All this, of course, will raise public spending significantly, but Orbán said the current economic projections for 2025 and the following years indicate that Hungary can afford it, while continuing to decrease public debt alongside steady economic growth.
Even before, Hungary’s family policies have received widespread international attention from abroad. For example, the government has also been providing large interest-free loans to newlyweds who pledge to have children within five years, large portions of which become grants after each subsequent child is born. Mothers of four have not only been exempt from paying income tax for years but can also apply for generous subsidies to buy seven-seater minivans.
All of these measures serve the same purpose: combatting the demographic decline by increasing the native population instead of relying on mass labor migration as many other Western nations do.
It’s no coincidence that Hungary’s family policies are often brought up as a model that should be followed elsewhere by conservative MEPs in Brussels. Just a few weeks ago, the European Commission presented its own set of solutions under the new ‘Demography Toolbox,’ which prompted a heavy debate in the EU Parliament for focusing on increasing third-world labor migration instead of incentivizing more births in Europe.
