As a part of its package for the consolidation of public finances, the Ministry of Finance, effective as of 1 January 2024, restricted or outright cancelled a number of tax reliefs applicable to personal income tax. These will make themselves felt for the first time in the income tax return filed in 2024.
As part of a government-sanctioned package of measures to consolidate public finances, the Ministry of Finance has reduced or completely abolished a number of personal tax allowances as of 01 January 2024. These limitations will be reflected in the annual tax return for 2024, which employees must submit to their employer by 15 February 2025.
From January 2024, the conditions for claiming the spousal allowance have been tightened under Section 35bb of the Income Tax Act. The amount of this allowance is CZK 24,840, or double that if the allowance is claimed for a spouse who is entitled to a disability (ZTP/P) card.
The spousal allowance can only be claimed if the taxpayer lives in a jointly managed household together with their spouse and the taxpayer’s dependent child under the age of 3. Another condition for applying this allowance is that the taxpayer’s spouse has no income of his or her own exceeding CZK 68,000 for the tax period.
This modification of the terms for claiming the spousal allowance is intended to support the full return of the second family member (spouse) to the labor market.
Furthermore, according to the wording of the amendment published by the Parliamentary Press, the following tax reliefs are completely abolished as of January 2024:
The student allowance, tax rebates for placing a child in pre-school, the so-called nursery fees, membership fees of a trade union member and examinations verifying the results of on-going professional training.
The following annual tax reliefs, on the other hand, have remained in the law and can still be used: deduction of pension and life insurance from the tax base, whereas it is possible to deduct contributions in the total amount of up to CZK 48,000. This total limit also includes so-called long-term investment products.
Long-term investment products serve the purpose of direct investment in securities and allows saving for one’s old age at higher rates of return. The funds invested in a long-term investment product can be claimed as a tax-deductible item, see the aggregate limit above.
A tax relief can also still be claimed for gifts, whereas the value of the gift must be at least CZK 1,000 or exceed 2% of the tax base.
Another tax relief that has been retained applies to interest paid on a home loan, whereas up to CZK 300,000 can be deducted from the tax base if the property was acquired before 2021. If the property is acquired from 2021 onwards, a maximum of CZK 150,000 can be deducted.
The basic personal allowance per taxpayer, the tax credit for children, the disability deduction and the deduction for holders of a disability card remain unchanged at the same amounts.
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Source:
Act No. 349/2023 Coll.,
parliamentary press 488/0