Tax Reliefs and Allowances in the Czech Republic - an overview
In the Czech Republic, income tax is 15% (up to an income of CZK 1,582,812 per year, and 23% on income exceeding this threshold).
However, tax allowances and reliefs can significantly reduce your final tax. This is their overview, for calculating an employee’s income tax.
Tax Allowances vs. Tax Reliefs
Every taxpayer can benefit from several tax reliefs and allowances. Both help reduce your overall tax burden, each differently:
- Tax Allowance = lowers your taxable income before calculating the tax
- Tax Relief = directly reduces the amount of tax you are due to pay
Tax Allowances
| Allowance Type | Amount | Notes |
Mortgage interest deduction |
Up to CZK 150,000 per year | Applicable for interest paid on mortgage loans. |
Pension insurance contributions |
Up to CZK 24,000 per year | Contributions exceeding CZK 12,000 are deductible. |
Private life insurance contributions |
Up to CZK 24,000 per year | Deductible if certain conditions are met. |
Donations to charities, blood donation |
Up to 15% of the tax base * | A minimum donation of CZK 1,000 or 2% of tax base. * |
* Tax base = the total amount of your taxable income (minus tax allowances). The tax is then calculated as: tax = tax base x tax rate.
Tax Reliefs
| Relief Type | Amount | How to Apply | Notes |
| Basic taxpayer relief | CZK 30,840 per year | Applied automatically by the employer | Standard relief for all taxpayers. |
| Spouse relief | CZK 24,840 per year | Annual tax reconciliation/tax return | Applicable if spouse’s income is below CZK 68,000 and they care for a child under 3 years old. |
| Disability relief (1st & 2nd level) |
CZK 2,520 / CZK 5,040 per year | Annual tax reconciliation/tax return | Based on the degree of disability. |
| Disability relief (3rd level) |
CZK 16,140 per year | Annual tax reconciliation/tax return | For severe disabilities. |
| Child tax relief (1st child) |
CZK 15,204 per year | Applied automatically by the employer | For the first dependent child. |
| Child tax relief (2nd child) |
CZK 22,320 per year | Applied automatically by the employer | For the second dependent child. |
| Child tax relief (3rd+ child) |
CZK 27,840 per year | Applied automatically by the employer | For the third and subsequent dependent children. |
How to apply tax allowances and reliefs?
Your employer automatically pays income tax from your wages each month. They also usually apply the Basic Taxpayer Relief automatically (up to CZK 2 570 a month). If you signed the “Declaration of the Taxpayer” form (Prohlášení poplatníka), it means your employer applies this tax relief for you each month.
But not all tax reliefs can be applied automatically. To claim some other tax reliefs and deduct your allowances, you need to submit a tax report once a year. Either in the form of 1] an annual tax reconciliation (roční zúčtování daně) done by your employer in your stead; or 2] a tax return (daňové přiznání), done by you and submitted directly to the tax office.
- Annual tax reconciliation: you can ask your employer to do your taxes for you only if you had one employer in the given year, and had one source of income. You can check with your employer whether all possible tax allowances or tax reliefs have been applied for you.
- Tax return: if you had multiple employers, earned additional income from self-employment, renting, or other sources, or wish to claim specific deductions (e.g., mortgage interest or spouse relief), you must file a tax return (daňové přiznání) with the tax office by 1 April (or 1 May if filed electronically).
For more details about the tax system in the Czech Republic and for answers about who can help you with your tax return, please visit our guide: Employee’s income tax
