The Government of Tax Cuts? Magyar’s Tax Reform Doubles the Tax for the Self-Employed

Only months after taking office, Hungary’s self-employed are discovering that the reality may look very different.
The government’s newly announced reform of KATA, Hungary’s simplified tax regime for small entrepreneurs, will ultimately double the basic monthly tax from HUF 50,000 to HUF 100,000.

That is a 100 percent increase.
For existing KATA taxpayers who invoice exclusively private individuals, the increase will be introduced in stages: their monthly payment rises from HUF 50,000 to HUF 75,000 in 2027 and to HUF 100,000 in 2028. New full-time participants in the redesigned KATA system will already face the HUF 100,000 monthly charge from 2027.

Magyar repeatedly presented his future administration as a government that would lower taxes, simplify the tax system and improve conditions for Hungarian workers and businesses. TISZA’s own campaign material declared: “The TISZA government will be the government of tax reductions.”

“The contrast with the election campaign. TISZA explicitly campaigned under its “Adócsökkentés+” — Tax Reduction+ — programme.”

EuroAsia.News, reporting from Budapest

KATA itself was presented within that tax-reduction programme.
Now one of the first major tax reforms affecting small entrepreneurs contains an eventual doubling of their fixed monthly payment.
Hungary’s difficult fiscal position cannot credibly be presented as something Péter Magyar discovered only after entering the Prime Minister’s Office.

Magyar was not an outsider suddenly confronted with the realities of government. He entered the Foreign Ministry after Fidesz returned to power in 2010, subsequently served at Hungary’s Permanent Representation to the European Union in Brussels, and from 2015 worked inside the Prime Minister’s Office. He later occupied senior positions in several state institutions and state-owned companies before breaking publicly with the Fidesz system in 2024.

He therefore had years of direct exposure to the Hungarian state, its finances, its administration and its relationship with the European Union before promising voters that a TISZA government would be “the government of tax reductions.”

That makes the contradiction much harder to explain away as a case of a new government simply discovering an unexpectedly empty treasury.
Magyar knew the system from the inside. He knew the structural problems of the Hungarian budget. He knew the pressures created by deficits, debt servicing and EU funding disputes.

Yet tax reduction remained one of the central promises of his election campaign.
Now, only months after taking power, his government is preparing a KATA system under which the basic monthly payment for full-time self-employed people ultimately rises from HUF 50,000 to HUF 100,000.

Voters can therefore reasonably ask whether the tax-cutting promise was realistic when it was made.
If Magyar already understood the condition of Hungary’s public finances — as his long government and state-sector career strongly suggests — then the explanation that circumstances simply changed after the election becomes not convincing. The political question is no longer merely whether TISZA has changed its policy. It is whether a promise central to the campaign was ever planned with the fiscal programme the government intended to pursue

The government can point to benefits in the new system. KATA will once again become available to a much broader group, including pensioners, university students and people running businesses alongside regular employment. Entrepreneurs will again be allowed to invoice companies rather than being restricted essentially to private customers. The annual revenue ceiling will also rise from HUF 18 million to HUF 22 million.

Those are significant improvements, particularly for entrepreneurs who were pushed out by the previous system.
But for people already operating under KATA, the central number remains impossible to disguise: HUF 50,000 becomes HUF 100,000.

There is another complication. Income from invoices issued to companies and other organisations will be subject to a 15 percent tax, although the fixed KATA payment will count towards this liability. For a full-time entrepreneur paying HUF 1.2 million annually, this effectively covers the tax on the first HUF 8 million of qualifying company revenue.

Magyar argues that higher contributions are necessary to supposedly provide entrepreneurs with better social protection, including higher sickness, maternity and future pension benefits. But it does not change the nature of the measure: when a compulsory tax payment rises from 50,000 to 100,000 forints, it is a 100% tax increase, regardless of the political explanation attached to it.

And KATA is not the only new tax being prepared.
The government has also announced a new wealth tax from 2027. Assets above HUF 1 billion would face a 1 percent annual levy, rising to 1.5 percent above HUF 100 billion. The government is simultaneously changing the EKHO simplified taxation system.
But that is precisely why the election promises matter.
Voters were not told that “the government of tax reductions” meant doubling the fixed tax paid by part of Hungary’s self-employed. They were told that taxes would come down.

Magyar spent the election campaign attacking the credibility of the previous government and promising a different political culture. That sets an especially high standard for his own words.
The KATA decision therefore matters far beyond the extra HUF 50,000 per month.

It raises a much larger question only months into the new government’s term: if one of the most memorable election promises are already changed this dramatically, which of Magyar’s other promises will be true.
For Hungary’s small entrepreneurs, the “government of tax reductions” is beginning with a tax that is heading in exactly the opposite direction.