[Czech Republic] Payroll changes in 2026

Every year, key wage-related parameters change, affecting payroll calculations. This article focuses on the most important adjustments, both parametric and systemic.

Minimum Wage

From January 1, 2026, the minimum wage has increased from CZK 20,800 to CZK 22,400 per month, or from CZK 124.40/hour to CZK 134.40/hour. Consequently, the minimum assessment base for health insurance, equal to the minimum wage, has also increased. The minimum health insurance premium is therefore CZK 3,024 per month. This increase in the minimum wage affects other wage parameters.

For example, the minimum income an employee must earn to qualify for a tax bonus (negative tax) has risen to CZK 11,200 (half of the minimum wage). The minimum surcharge for work in difficult working environments has also increased to 10% of the minimum wage.

Reduction thresholds

The reduction thresholds for sickness insurance, which affect the maximum amount of sickness benefits and indirectly the maximum wage compensation for sickness paid by employers for the first 14 days, have increased by 5.2%.

The new reduction limits for 2025 (with hourly rates for wage compensation for sickness in brackets) are:

1. Reduction limit: CZK 1,663 (CZK 285.78/hour)
2. Reduction limit: CZK 2,449 (CZK 428.58/hour)
3. Reduction limit: CZK 4,897 (CZK 856.98/hour).

Determining income

The determining income threshold for social insurance remains CZK 4,500. If an agreed monthly income is lower than CZK 4,500, the employment is considered small-scale employment, and social insurance contributions will only be paid once this threshold is exceeded.

For health insurance, this threshold is linked to health insurance contributions for employment contracts outside standard employment (DPČ), regardless of whether the employment qualifies as small-scale employment or not. In other words, for health insurance it does not matter what monthly income was agreed. Contributions will only be paid once income reaches CZK 4,500.

Insurance Threshold for DPP

Due to the increase in the average wage, insurance contributions for agreements to perform work (DPP) will newly be payable from the threshold of CZK 12,000 instead of the original CZK 11,500.

Increase in tax-exemption limits for meal vouchers and meal vouchers lump sum

The Ministry of Labor and Social Affairs increased the meal allowance amounts for business trips. Since the exemption limit for meal vouchers and meal vouchers lump sum is linked to the maximum meal allowance for employees remunerated on business trips lasting 5 to 12 hours, this limit also changes. The new upper limit is CZK 185. The exemption limit is set at 70% of this amount, resulting in a new exemption limit of CZK 129.50.

Maximum Assessment Base for Social Insurance

With the increase in the average wage for 2026, the annual maximum assessment base for social insurance has also risen. Once an employee reaches this limit during the year, neither the employee nor the employer pays social insurance. For 2026, this limit is CZK 2,350,416.

Threshold for progressive taxation

The threshold for progressive taxation is also tied to the average wage. This threshold is set at 36 times the average wage (or three times for a monthly period). The annual threshold for progressive taxation is thus CZK 1,762,812, and the monthly threshold is CZK 146,901.

Decrease in flat-rate compensation for remote work

A decree decreased the flat-rate compensation for remote work specified in Section 190a, Paragraph 4 of the Labor Code No. 262/2006 Coll.

The new flat-rate amount for each hour commenced is CZK 4.70, a 2.1% decrease.

It is worth noting that for remote work (outside the employer’s premises), employees are entitled to compensation for expenses incurred (electricity, heating, internet connection, etc.). These costs may be reimbursed by the employer based on actual proven expenses or as a flat-rate amount, whose amount is determined by a decree of the Ministry of Labor and Social Affairs. Employers and employees may also agree that compensation or part thereof will not be provided.

Changes in Wage Garnishments

As of 1 January 2026, significant systemic changes take effect in the calculation of wage garnishments, specifically in determining non-seizable amounts and the amount above which the remainder of net wages may be garnished without limitation.

Under the previous rules, calculations were based on the sum of the individual living minimum (LM) and normative housing costs (NHC). The basic non-seizable amount of the employee equaled two thirds of this sum. The non-seizable amount per dependent person was set at one quarter of the basic non-seizable amount. The amount above which the remainder of net wages could be garnished without limitation corresponded to 1.5 times the sum of the living minimum and normative housing costs.

From 2026, the calculation changes. The basic non-seizable amount will be determined as 85% of the sum of three items:

• the individual living minimum,
• normative rent for a single-person household in a municipality with at least 70,000 inhabitants,
• the energy allowance for a single-person household.

The method for calculating the non-seizable amount per dependent remains unchanged—it continues to equal one quarter of the basic non-seizable amount. However, the threshold above which the remainder of net wages may be garnished without limitation has changed and is now set at 1.9 times the sum of the three items listed above.

As a result of these changes, as of 1 January 2026:

• the basic non-seizable amount increased to CZK 14,101.50,
• the non-seizable amount per dependent increased to CZK 3,525.37,
• the amount above which wages may be garnished without limitation increased to CZK 31,521.

It is now explicitly stipulated that for the calculation of non-seizable amounts, the living minimum, normative rent, and energy allowance amounts valid as of 1 January of the calendar year in which wages are paid are to be used. In practice, this means that the new rules already apply to wages paid for December 2025. On the other hand, there should be no changes to non-seizable amounts during the year, as under the new provision the amounts valid as of 1 January of the given year are to be used throughout the entire year.

Threshold for Withholding Tax

The monthly threshold for withholding tax for DPP has changed to CZK 11,999. For other types of income, the threshold remains CZK 4,499 (in the vast majority of cases, this refers to standard employment contracts and DPČ). Within these limits, withholding tax will be applied if the taxpayer’s declaration has not been signed. For higher income amounts, advance income tax will be applied.

However, withholding tax for non-resident managing directors has been completely abolished.

New Social Insurance Contribution Rate for Hazardous Work and Paramedics / Firefighters

As of 1 January 2026, a new social insurance contribution rate applies to hazardous occupations and to paramedics or firefighters. For this purpose, a hazardous occupation is defined as employment classified in category 4 under the Public Health Protection Act.

The contribution rate for “hazardous” employees is set at 27.8%. This represents the portion of social insurance contributions payable by the employer. Further increases are planned for 2027 and 2028.

For employees in the paramedics/firefighters group, the contribution rate is set at 29.8%. This increase is the final one for this group, and no further increases are planned in subsequent years.

The standard rate for other employees remains unchanged at 24.8%.

New Limits for Tax-Exempt Benefits

Already in 2024, non-cash benefits related to health needs, sports, recreation, culture, etc. (§ 6(9)(d) of Act No. 586/1992 Coll., on Income Taxes) were limited by introducing an aggregate annual cap equal to half of the average wage.

In 2025, benefits were further divided into health benefits and other benefits. Health benefits are subject to an annual tax-exempt limit equal to the average wage, while other benefits are subject to a limit equal to half of the average wage.

In the case of health benefits, these must involve the purchase of goods or services of a healthcare, medical, hygienic, or similar nature from healthcare providers, or the purchase of medical devices prescribed by a doctor.

If non-cash income is credited to an employee, it is tax-exempt only up to the applicable limits. Income exceeding these limits is taxable and subject to both health and social insurance contributions.

Due to the increase in the average wage, as of 2026 both limits increase:

• New limit for health benefits: CZK 48,967
• New limit for other benefits: CZK 24,483.50

Unified Monthly Employer Report (JMHZ)

A very significant change is the introduction of the Unified Monthly Employer Report (JMHZ).

JMHZ is a new centralized electronic reporting system that, as of 2026, fundamentally changes the way employers submit employee and payroll data to public authorities. Instead of dozens of separate reports and forms (approximately 25 different filings), employers will submit just one monthly electronic report – the JMHZ – which will contain all relevant data required by various authorities (social security administration, tax authorities, labour offices, statistics, etc.).

In practice, employers will submit highly detailed information each month about all their employees. This information will include calculated wages broken down into supplements, bonuses, wage compensation, hours worked and not worked, wage deductions, mandatory contributions, and more.

Along with JMHZ, new rules for registering and deregistering employees will come into force, including the data that must be maintained and reported and the deadlines for fulfilling registration obligations. Newly, absolutely all employees will have to be reported, regardless of whether they are insured or not. The definition of an employee is very broad, and essentially applies whenever there is any connection between the employee and the Czech Republic.

We are gradually collecting further information and will inform clients individually or via newsletter.

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