Changes in personal income tax as of 1 january 2021
Authors: JUDr. Ing. Miloš Olík, Ph.D., LL.M., FCIArb, Mgr. Martin Dolnák, Mgr. Simona Mlýnek Štursová
This week, the Senate returned to the Chamber of Deputies an amended version of a tax package which significantly amends the system of taxation of personal income.
- Abrogation of supergross wages
Health (9%) and social insurance (24,8%) paid by the employer will no longer be counted in the calculation of personal income tax bases. The tax rate of 15% will apply to only gross wages as such. An increase in tax rate will concern only the solidarity tax, which will be increased to 23%. This tax rate will apply to incomes exceeding four times the average salary (CZK 141,764 in 2021).
- Cash allowances for meals
In addition to allowances for factory meals and meal vouchers, employers will newly be given an option to provide their employees with meal allowances in cash. As in the case of printed meal vouchers, the allowance from the employer amounting to a sum stipulated by law will be exempted from taxation and compulsory payments.
- Increased tax rebate and tax advantages
As part of the 2021 tax package, the tax rebate will also be increased from today’s CZK 24,840 to CZK 27,840 for 2021 and to CZK 30,840 for 2022. It is also proposed that the limitations on the payment of tax advantages amounting to CZK 60,300 should be repealed within the framework of the 2021 amendment.