Hungary just canceled income tax for new moms in their 20s. It's the country's latest attempt to fix its long-term labor shortage.

Hungary just canceled income tax for new moms in their 20s. It's the country's latest attempt to fix its long-term labor shortage.
Hungary PM Viktor OrbanReuters
  • Hungary is eliminating the income tax for mothers under the age of 30.
  • It's one of several moves the government has made in recent years to try and boost its birth rate.

In the United States, a declining birth rate and lower immigration have raised concerns that the labor shortage will persist in the years ahead.

It's far from the only country facing this problem, however. One European nation recently unveiled a new proposal it hopes will help turn the tide.

As of January, women in Hungary who become mothers under the age of 30 "will be exempt from paying personal income tax" for the rest of their lives, Balázs Orbán, political director of Hungarian Prime Minister Viktor Orbán, announced in a late December Tweet.

"Hungary extends its family-friendly policies," he said.

In the first quarter of 2022, a near-record high 87,000 jobs were reportedly left unfilled in Hungary, and the problem could persist in the decades to come. Since 1975, the country's fertility rate has fallen from 2.4 births per woman to 1.6 as of 2020, dipping below the 2.1 replacement rate required to maintain population growth absent an increase in immigration.


The situation has led the Hungarian government to make a series of moves in recent years in an effort to boost its workforce. It previously eliminated the income tax for workers until the age of 25 — to incentivize young workers to find jobs — and mothers with at least four children.

Tighter abortion laws have also accompanied Hungary's push to boost its birth rate. While abortion in the first 12 weeks of pregnancy has been legal in Hungary since 1953, the government issued a decree last September requiring abortion providers to provide mothers with "clearly identifiable indication of fetal vital signs" before they decide whether to terminate the pregnancy. It's possible additional restrictions could follow.

While increased immigration may be part of the answer, Hungary's immigration policies — which are among the strictest in Europe — have deterred some newcomers and are partially responsible for the labor shortage. The government has also been accused of anti-immigrant rhetoric, which likely hasn't helped attract immigrants either.

"For the West, the answer is immigration," Prime Minister Orbán said in 2019. "For every missing child there should be one coming in and then the numbers will be fine. But we do not need numbers. We need Hungarian children."