Reduced social tax for employees with decreased work ability: what to keep in mind at year-end?

The reduced social tax for employees with decreased work ability is an accrual-based support measure in which the Unemployment Insurance Fund pays the employer’s social tax on behalf of an employee with decreased work ability, based on a one-time application. The allowance is calculated according to the monthly social tax rate applicable to the specific calculation period (month).

Monthly rates

In 2025: 20% of €820, i.e. €164.

In 2026: 20% of €886, i.e. €177.20.

How the social tax reduction is applied at year-end

The turn of the year often raises questions, because December and January have different monthly rates. It is important to remember that the allowance depends on the month to which the wage calculation belongs, not on when the wage is actually paid out.

Applying monthly rates

In December 2025, the applicable monthly rate is €820. The Unemployment Insurance Fund pays social tax for December based on €820, regardless of whether the wage is paid in December or January.

In January 2026, the applicable monthly rate is €886. The Unemployment Insurance Fund pays social tax for January based on €886, regardless of the payout month.

Completing the TSD

The employer records the allowance under code 1070 in Annex 1 of the TSD, taking each month into account separately.

If wages for several months are paid at once, the allowance for each month must be added according to the monthly rate applicable at that time.

Examples of calculating the social tax reduction

December wage paid in December 2025: Annex 1 code 1070 shows a reduction of €820.

December wage paid in January 2026: The January TSD also shows €820, as it concerns the December calculation month.

January 2026 wage paid in January: The TSD reflects €886.

January 2026 wage paid in February: The February TSD also shows €886, because the calculation belongs to January.

What else to keep in mind

• The allowance cannot be carried over to subsequent months. Each month’s allowance is calculated separately, and any unused amount cannot be added to later periods.
• If the gross wage is lower than the monthly social tax rate, the reduction can be applied only up to the gross wage amount for that specific month.