Taxes

1. Tax advantages for second, third and more children

The tax advantages already increased in 2021 with retroactive validity from the beginning of 2021 - the change for the year 2021, however, will be calculated as part of the annual settlement of the tax by the employer (which the employee must request by 15.2.2022) or in the tax return for the year 2021. The new amounts of the tax advantage will first be applied monthly in the wages for January 2022.

Thus, the tax advantage for a child from the year 2021 amounts to:

• CZK 15 204 (CZK 1 267 per month) as the discount for the first child - this remains unchanged,
• CZK 22 320 (CZK 1 860 per month) as the discount for the second child,
• CZK 27 840 (CZK 2 320 per month) as the discount for the third and any additional children.

If your child is a holder of an identity card designating him/her as having a particularly severe disability with a guide, the tax advantage is doubled:

• CZK 30 408 (CZK 2 534 per month) as the discount for the first severely disabled child - this remains unchanged,
• CZK 44 640 (CZK 3 720 per month) as the discount for the second severely disabled child,
• CZK 55 680 (CZK 4 640 per month) as the discount for the third and any additional severely disabled children.

 Cancellation of limit for tax bonus 

In the tax package from 2021, the limit for the amount of the annual tax bonus (CZK 60 300) was cancelled. The lawmakers, however, forgot that the legislative regulations also contain a monthly limit of CZK 5 025. Thus, the monthly limit continued to be used in 2021 for the calculation of employees’ wages. The reconciliation of the bonus that was not applied in 2021 due to the monthly limit will take place either in the monthly tax settlement of the employer or in the tax return for the year 2021. 

The tax bonus can be used by taxpayers who had income from employment or business in the amount of at least six times the minimum wage in the given year. For the year 2021 this amounts to CZK 91 200, for the year 2022 it is CZK 97 200. Income from rent and capital assets are no longer counted in this limit. 

Application of decreased limit for the deduction of interest 

The decrease of the tax base by the paid interest from a loan used for housing needs can be applied in the annual tax settlement by the employer or in the tax return for the given calendar year. In the tax package for 2021, the maximum limit for the deduction of this interest was changed. The limit decreased from CZK 300,000 to CZK 150,000, but only when the housing need was obtained from 1 January 2021 on (the date of obtaining the housing need is decisive, not the date the loan agreement is concluded).

The right to the deduction of interest remains unchanged for housing needs obtained by the end of 2020.

The new limit, however, is also valid for older loans increased by other funds, e.g., for reconstruction that was completed after 1.1.2021. 

Increased limit for exemption of pensions from taxation 

Regularly paid pensions are exempt from income tax if the annual amount does not exceed 36 times the minimum wage. In 2021, the limit was CZK 547 200, while for 2022, the limit is CZK 583 200.