How Czechia's new tax laws and changes will hit employees and companies

New income tax thresholds and changes to social and health insurance are already affecting businesses, employees, and self-employed workers across Czechia in 2026. For expats, the impact can be harder to spot, especially for those with foreign income, stock benefits, short-term contracts, or cross-border roles. Expats.cz spoke with Petra Bobková, managing director of global mobility firm Vialto Partners in the Czech Republic, to gain a full understanding of what is different, and how employees and companies can adapt as effectively as possible.

The threshold for the 23-percent personal income tax rate has risen in 2026 to around CZK 1.76 million gross annually (approximately CZK 146,000 per month). Individuals earning below this threshold will continue paying the standard 15-percent rate.

For employees on short-term contracts (DPP agreements), the mandatory social and health insurance threshold will increase to CZK 12,000 per month, from CZK 11,500. Registration of DPP agreements is required.

Both these adjustments reflect rising average wages, and both employees and employers will need to account for the changes in budgeting and payroll calculations.

Alongside changes to tax rates and thresholds, companies will also need to prepare for a major shift in how payroll, tax, and insurance data are reported to the state. The Unified Monthly Employer Report (or JMHZ) will replace approximately 25 separate filings with a single digital submission to the Social Security Administration. Payroll and HR systems will need updates to comply with the new format, with the transition period ending in April 2026.

Investors will see the repeal of the CZK 40 million exemption cap for traditional securities, allowing unlimited tax-free gains under certain conditions. The cap remains in place for crypto assets, meaning gains above CZK 40 million from crypto will be subject to standard income tax rates.

From January 2026, the Income Tax Act introduces a new category of employee stock option plans with more favorable tax treatment, provided certain legal conditions are met. Income from qualifying stock options is no longer treated as employment income, but taxed as “other income.”

This means the income will not be subject to social security or health insurance contributions, potentially lowering the overall tax burden for eligible employees.

From this year, the current 15-percent final withholding tax on pay for statutory representatives who are Czech tax non-residents no longer exists. Their income will still be taxable in Czechia, but it will now follow the standard payroll system and progressive income tax rates of 15 percent or 23 percent, depending on total earnings. If their income reaches the higher threshold, they will also need to file a Czech personal income tax return this year.

Self-employed workers now pay higher minimum contributions in 2026. Health insurance payments have increased to CZK 3,306 per month, while social insurance payments were originally slated to rise to CZK 5,720 per month. The flat-rate tax has increased to CZK 9,984 per month, with bands 2 and 3 remaining at CZK 16,745 and CZK 27,139 per month. 

Starting self-employed individuals (those who began their activity in 2024 or later) benefit from lower social insurance deposits of CZK 3,575 this year. 

Changes to employee benefits taxation mean that only payments not tied to wages or work performance will be fully tax-exempt. Leisure and health benefits remain exempt only if provided in addition to wages, not as a replacement for part of the salary. 

The annual limits for 2026 are CZK 48,967 for health benefits and CZK 24,483.50 for leisure benefits. 

Excise duties will increase in several categories. Spirits will rise by 5 percent, cigarettes and other tobacco products by 5 percent, and heated tobacco products by 15 percent. This is all as part of a continuation from the government’s comprehensive 2023 consolidation package.

Czechia’s 2026 tax reforms affect employees, self-employed workers, and companies across multiple areas, from income tax to benefits and reporting obligations. Early preparation, attention to deadlines, and careful review of payroll and investment plans will help ensure smooth compliance and avoid unexpected costs.