As the new coalition government prepares its own version of the 2026 state budget, several tax changes have already been outlined in the coalition agreement. Many of these measures will affect individuals, including employees, families, and freelancers.
Here’s a brief overview of the key tax-related proposals you should be aware of as a taxpayer in Czechia.
Return of Previous Tax Deductions
Several tax reliefs that had been reduced or removed in recent years are now expected to return:
Kindergarten allowance (school fee deduction for children in preschool)
Spouse deduction — to be expanded again without limitations based on the child’s age
Student tax credit — to return after being previously removed
Refundable tax credit — in cases where individuals don’t earn enough to use the full allowance, unused parts may be refunded
Increased child tax credit — for the fourth and each additional child
These changes are expected to benefit families, students, and low-income earners, while supporting household budgets and encouraging employment flexibility.
Employee-Related Changes
Employees may also see some significant updates under the new tax policy framework:
Removal of the cap on tax-free employee benefits, such as leisure and wellness vouchers or other non-cash perks.
Tax exemption for voluntary tips in gastronomy under defined conditions — meaning no income tax, social, or health contributions will apply.
These measures are designed to simplify payroll taxation and boost fairness in the hospitality sector.
Slower Growth of Social Security Contributions for Self-Employed
Under the previous government, minimum contributions to social security for self-employed persons (OSVČ) were set to rise significantly.
The new coalition plans to halt this increase, keeping the minimum base at 35% of the average wage instead of the previously scheduled 40%.
This change may be welcomed by freelancers and small entrepreneurs who pay minimum advances. However, as before, lower contributions could mean lower pension entitlements in the future — something to consider in long-term planning.
Tax and Social System Administration
Several structural reforms are also planned to improve the efficiency and transparency of tax collection:
Reintroduction of electronic sales registration (EET) from 2027, but in a much simplified digital form:
Free software provided by the Czech Tax Administration
No mandatory printed receipts or permanent online connection
Small trades and occasional income to be exempt
Unified collection point combining the payment of income tax, social security, and health insurance.
Elimination of the obligation to report employees under short-term contracts (DPP) to social and health insurance authorities.
Increased use of advanced analytics and artificial intelligence to detect illegal tax optimisation.
Stricter oversight of employment agencies to prevent tax and insurance fraud.
Ongoing digital transformation of the online tax office to make filing and communication easier for individuals and businesses.
Enhanced control of foreign marketplaces and e-commerce platforms to ensure fair tax competition.
Simplified administrative reporting for small and medium-sized enterprises.
These updates reflect the government’s focus on digitisation, fairness, and reducing administrative burdens — particularly for smaller taxpayers.
Lower Corporate Taxes and Broader Deductions
Although this mostly applies to companies, individuals running businesses through s.r.o. structures or freelancing may benefit indirectly from:
A proposed corporate income tax cut from 21% to 19%
Faster depreciation of capital investments, making it easier to deduct equipment and technology costs
These steps are intended to encourage investment and business growth.
Unclear Fiscal Impact
Analyses suggest that while these measures aim to support households and businesses, they could lead to reduced state revenue — possibly by CZK 40–60 billion per year.
At the same time, the government hopes to balance this through:
Improved tax collection from multinational companies
Digital monitoring tools and the modernised tax administration system
However, whether these reforms will fully offset the cost of new tax breaks remains to be seen.
What Does It Mean for You?
While many of these proposals are still in early stages, they could directly affect your tax filing, pension planning, and overall financial strategy in the coming years.
We’ll continue monitoring updates and provide more detailed guidance as the proposals turn into legislation.