Increase in deduction limits for pension and life insurance effective in 2017

Increased deduction limits for pension and life insurance will become effective starting with the 2017 tax period. The current maximum amount of CZK 12,000 per year will be increased to CZK 24,000.

Regarding pension insurance, the maximum tax deduction will be CZK 24,000, which means a tax savings of CZK 3,600 (the monthly contribution must be CZK 3,000). The yearly total contributions of CZK 36,000 are decreased by CZK 12,000 for the purposes of tax deduction because only the part of the monthly contributions exceeding the amount of monthly contribution to which the maximum state contribution applies can be deducted.

Regarding life insurance, the maximum tax deduction will be CZK 24,000, which means a tax savings of CZK 3,600 (the monthly contribution must be CZK 2,000).

Starting with the 2017 tax period, the tax deduction limit for tax exemption of pension and life insurance contributions paid by employers to the employees will increase from the current CZK 30,000 to CZK 50,000 per year. The contributions up to this amount are not included in the base for calculating social security and health insurance. The contributions can be also tax deductible expenses for employers.