On 16 November 2020, the government negotiated an increase in the minimum wage for 2021. According to the draft government regulation under discussion, the minimum wage should amount to CZK 15,200 and the minimum hourly wage to CZK 90.50 with effect from 1 January 2021. The lowest levels of the guaranteed wage also increase accordingly.
Compared to 2020, this is an increase of only CZK 600, which is significantly less than the year-on-year increase between 2019 and 2020, when the minimum wage increased from CZK 13,350 to CZK 14,600.
Minimum wages are relevant for determination of the following:
- Maximum amount of tax relief for placing a child in a kindergarten (i.e. kindergarten relief). Whereas the tax credit for 2020 amounts to CZK 14,600, it will amount to CZK 15,200 for 2021.
- Annual child-related tax bonus. The entitlement to this tax bonus arises if annual taxable income pursuant to Article 6 or 7 of Income Taxes Act reaches at least 6 times the minimum wages – i.e. CZK 87,600 for 2020 and CZK 91,200 for 2021.
- Conditions for claiming the monthly tax bonus. Income from employer in the given month must amount to at least one half of the minimum wages i.e. CZK 7,300 in 2020 and CZK 7,600 as of 1 January 2021.
- Cap for taxation of regularly paid pension, which is exempt up to 36 times the minimum wages goes up from CZK 525,600 in 2020 to CZK 547,200 in 2021.
- The minimum health insurance premiums for persons without taxable income, which increases to CZK 2,052 from 1 January 2021.