Hungary has announced a major tax reform that exempts mothers from income tax based on the number of children they have. This policy — to counter declining birth rates — was announced by Prime Minister Viktor Orban during his State of the Nation address in Budapest. It is set to roll out in phases starting October 2025.
Under the policy, women who have one child will be exempted from income tax until they turn 30, while those with two or more children will receive a lifetime exemption.
This builds on an existing policy that grants life-long tax relief to mothers with four or more children.
In a post on X (formerly Twitter), Viktor Orban wrote, “Hungary is making history with the largest tax cut in Europe & the entire Western world! We are building the world's first family-centred economy: One-child mothers are exempt from income tax until they turn 30. Two or more children? No income tax for life! Securing the future of Hungarian families for decades to come.”
Hungary is making history with the largest tax cut in Europe & the entire Western world!
We are building the world's first family-centred economy:
👶 One-child mothers exempt from income tax until they turn 30.
👩👧👦 Two or more children? No income tax for life!
Securing the… pic.twitter.com/iGY96p5LiZMarch 16, 2025AdvertisementTesla and SpaceX CEO Elon Musk gave his stamp of approval by calling it a “good idea.”
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March 16, 2025In addition to the tax relief, Hungary will introduce a cap on housing loan interest rates at 5% from April 2025 as part of broader measures to stimulate economic growth.
Orban described the tax cuts as the “biggest tax reduction programme in Europe.” He acknowledged the significant financial burden the policy would impose, but expressed confidence that a revitalised economy, coupled with pro-business measures and full employment, would sustain the initiative without inflating public debt, according to a February 2025 Reuters report.
AdvertisementHungarian Economy Minister Marton Nagy said the tax exemption for mothers of three children will cover around 2.5 lakh women and cost the state around 170 billion forints (around Rs 3,829 crore) annually. At present, around 70,000 mothers of four or more children benefit from existing tax exemptions.
Hungary's Population Crisis
Hungary is facing a demographic crisis, with its population estimated at 9.6 million in 2023. Following a sharp decline in birth rates after the 2008 financial crisis, the country found itself at the bottom of Europe's fertility rankings. In response, the government introduced a series of pro-family policies, including progressive tax breaks for each additional child and the establishment of state-run fertility clinics.
Initially, these measures showed promise. According to a 2024 report in Politico, Hungary's total fertility rate — the average number of births per woman — rose from a low of 1.2 in 2011 to 1.6 in 2021. But progress has since stalled, and the latest data from 2023 indicates a decline from the previous year.
Looking ahead, the HUN-REN Centre for Economic and Regional Studies projects that Hungary's population could shrink to 8.5 million by 2050.
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