What really reduces the tax base

The tax base is dealt with in Czech households once a year, sometimes in March, and almost always late. One sits over a confession or over an annual settlement, finding out that he could do more, and saying that next year he will take it another way. Then another March comes and the situation repeats.

I meet this at meetings of the order, even for people who understand money more than well. It's not negligence. It's that the deductions are referred to as a list of positions that one should remember, instead of talking about what it actually means for a particular family or company.

This is an overview of what the tax base of a natural person really reduces, in what amounts it is moving and where there is a difference between what people think and what people think and how it works. It is not tax advice, and the particular situation always needs to be discussed with the accountant or the taxpayer.

Overview in one table

At a 15 % tax rate, the deduction corresponds to a tax reduction of CZK 10 000 by CZK 1,500. The exhausted ceiling for old-age products can therefore bring CZK 7,200 per year. The actual savings depend on the tax situation and the sufficient basis of the tax.

Old-age products have one common limit, not three

This is the most common mistake I've ever made. People have a pensioner, someone already has a DIP, and they count the limit for each particular one. This is not how it works. Since 2024, all tax-backed old-age products have one common ceiling: 48 000 CZK per year, whether they are distributed among pension insurance, supplementary pension savings, private life insurance and long-term investment products, however.

At a 15 % rate, this means a maximum tax saving of CZK 7,200 per year. It is not the amount that would change someone's life, and that is why there should be no main reason why a person is making a deal. That is the last part.

For pension savings, there is one more pasture to be forgotten: the part of the monthly deposit that exceeds 1,700 Kč. The first 700 Kč is linked to the state contribution and does not enter into the deduction. To use up the entire 48,000 CZK only via the pension, one would have to send about 5,700 CZK monthly. The vast majority of people who meet are sending three hundred CZK and wonder that there is nothing to confirm. This rule does not apply equally to the recipients of an old pension that no longer belongs to the state; for them the own deposits can be deducted from the first crown within the common limit.

Mortgage is a larger item than the whole pension

Interest on the mortgage or on the loan from the building savings can be deducted up to CZK 150,000 per year for residential needs provided from 1 January 2021. For residential needs procured before this date, the limit of 300 000 Kt. The limit is not only the date of the negotiation or refinancing of the credit. Limits are assessed for the jointly-managing household. The interest paid is deducted, not the full repayment; the use of the property and other conditions need to be verified individually.

For higher mortgages agreed in summer, when the rates jumped up, it is a significantly larger item than the entire ceiling on old-age products. And the confirmation from the bank goes by itself, just remember to add it.

What can be deducted outside financial products

In addition to products and mortgages, there are still gifts. Gifts for public utility purposes can be deducted up to 30 % of the tax base, with the sum of donations must be at least CZK 1,000 or exceed 2 % of the tax base.

This category also includes a donation, which most people do not consider in connection with taxes. One blood sample is calculated as a gift of 3,000 Ks. bone marrow or stem cell collection as 20,000 Kt. A human who goes for blood four times a year has a 12 000 CZK deduction every year, which he has often never heard of. All he needs is a certificate from a blood transfer station.

And one more thing that still hangs in the familiar: union contributions and fees for the tests that verify the results of further education have been deducted at the earliest. The consolidation package has cancelled them. If someone is still naming them between the responses, they work with an old list.

For entrepreneurs: it works differently through the company

The deduction according to the preceding paragraphs is a personal matter of the owner as a physical person, but there is a second channel that does not have a common limit: the employer's contribution.

The company can contribute to the employees' tax-backed savings products on an old age basis, such as pension savings, DIP or private life insurance. The employee's contribution is exempt from tax and insurance up to the total limit of CZK 50,000 per year from the same employer. The company's tax deductible requires the relevant conditions, such as the establishment of a claim in the contract or internal regulation.

With the owner, who is also an employee of his company, it opens up two paths alongside himself: a deduction from his own deposits and a contribution from the company. It is also one of the few benefits that can be offered to the whole team and it is not just another item in the payroll. It works significantly better for people who remain with the company for years.

There is one aspect to be overlooked: the exemption is based on the fact that it is a tax-backed product, i.e. a contract from which money is collected only when the legal conditions are met. Old contracts with the possibility of continuous withdrawals do not satisfy this and it is worth verifying before the contribution is set.

Tax saving is not a reason. It is a bonus

Now, what I'm told is worse than the previous number. In 13 years, I've seen a lot of contracts that were created only to save on taxes. Most of them were misadjusted and some of them were actively damaging people.

Seven thousand crowns a year is pleasant. But it is not a reason to send five thousand a month to produce, which you will not get out of until you're 60, when you also don't have a reserve for three months of domestic operation. The need and liquidity always go before tax relief. If you turn around, it ends up with an early selection and delivery, which is exactly the opposite of why you negotiated it.

The correct order is boring and functional: first, knowing what you are left with a month, then having a reserve aside, then having a treated income failure, and then solving which of these products makes sense and if you can still use the rest. Tax relief is then a pleasant consequence of a well-built plan, not its basis.

When you have it built, it's worth sitting down once a year for 15 minutes and checking if you're taking out what's coming to you anyway. The best time for that is not March, but November, when there's still something to be done about it.

Resources

• Non-taxable items in 2025-2026-Money.cz
• Tax deductions in 2026 Czech savings bank
• Life insurance and pension savings: how much will you save on taxes in 2026 NN
• Life and pension insurance contributions, i.e. CONFORMITY Portal