Taxes for self-employed people 2026: flat-rate tax, lump-sum expenses and returns

Taxes for self-employed people in 2026 in brief

Are you a sole trader and want to know how much of your income the state will take? The short answer: it depends on the regime you choose. Either you pay flat-rate tax (paušální daň), one monthly amount covering tax and both insurances, or you file a standard tax return and pay 15 % (23 % on higher income) from a tax base that you can reduce with a lump-sum expense allowance.

In this article we go through both regimes, the 80/60/40/30 % lump-sum expense allowances, the VAT limit and all deadlines. Most importantly, we show the numbers, because only a concrete calculation shows what pays off for you.

Note one thing at the start: registration of natural persons for income tax was abolished from 1 January 2024. When you set up a trade licence, you do not have to register yourself with the tax office. You deal only with ČSSZ (Czech Social Security Administration) and your health insurance company. Tax comes only after the end of the year.

Personal income tax: 15 % and 23 %

If you are not in the flat-rate regime, you calculate tax from the tax base, which is your income minus expenses. Czech income tax has two bands:

The threshold of 1,762,812 Kč is 36 times the average wage (48,967 Kč for 2026). Important: the higher 23 % rate applies only to the part of profit above the threshold. Not to the whole base. So if you earn one crown more, you do not lose out; only that extra crown is taxed at 23 %.

Taxpayer credit: 30,840 Kč per year

Every self-employed person (OSVČ) is entitled to the basic taxpayer credit of 30,840 Kč per year (2,570 Kč per month). This amount reduces the calculated tax, not the tax base. As long as your annual tax before the credit is lower than 30,840 Kč, you pay no income tax.

In practice this means that at a tax base of roughly up to 205,600 Kč per year, income tax comes out at zero. You can of course add further credits and deductions: for a spouse with low income, tax relief for children, mortgage interest, pension savings contributions. These credits often decide whether to stay with a standard return or move to the flat-rate option.

Warning: the taxpayer credit cannot be claimed if you are in the flat-rate regime. It is already included in the monthly amount there.

Lump-sum expense allowances: 80, 60, 40 and 30 %

This is why many sole traders like the standard tax return. Instead of keeping receipts and proving actual expenses, you can claim expenses as a percentage of income. No paperwork, no arguing with the office over what was really necessary.

The allowance depends on the type of activity and, since 2023, the higher caps again apply (calculated from income of 2,000,000 Kč):

Say you operate an unrestricted trade, for example consultancy or an e-shop, and invoice 600,000 Kč for the year. With a 60% allowance you claim expenses of 360,000 Kč without proving anything. The tax base falls to 240,000 Kč. Tax at 15 % is 36,000 Kč; after deducting the taxpayer credit (30,840 Kč), you pay only 5,160 Kč in income tax for the whole year.

When does a lump-sum expense allowance pay off? Whenever your actual costs are lower than what the allowance lets you deduct. Typically this applies to activities where the main value is your work, not purchased material: consultants, programmers, hairdressers, lecturers.

Tip: A craftsperson with an 80% allowance is in the best tax position of all. With income of 600,000 Kč, the tax base is only 120,000 Kč, and after the taxpayer credit they pay no income tax at all.

Flat-rate tax: one payment and peace of mind

Flat-rate tax is a voluntary regime for self-employed people who do not want to deal with returns or income and expenses statements (přehled). You pay one monthly amount that already includes income tax, social insurance and health insurance. No tax return, no statement for OSSZ (district social security administration) and the health insurance company, provided you meet the conditions and do not exceed the limits.

Three bands for 2026

Watch the first band: for 2026 the amount is stated as 9,984 Kč/month (up from 8,716 Kč in 2025). During 2026, however, a draft amendment is supposed to reduce it again by roughly more than 800 Kč per month, with overpayments made at the start of the year to be refunded. This legislation is under discussion, so verify the current amount and the status of the amendment directly with the Tax Administration before deciding. The amounts in bands 2 and 3 are unchanged from 2025.

Which band you belong to

Classification depends on annual income and on the lump-sum expense allowance you could claim:

• Band 1: income up to 1,000,000 Kč (any activity); or up to 1,500,000 Kč if at least 75 % of income falls under the 80% or 60% allowance; or up to 2,000,000 Kč with an 80% allowance on at least 75 % of income.
• Band 2: income up to 1,500,000 Kč (any activity); or up to 2,000,000 Kč with an 80% or 60% allowance on at least 75 % of income.
• Band 3: income up to 2,000,000 Kč (any activity).

Entry conditions and deadlines

You can enter the flat-rate regime if all of the following apply:

1. you are not a VAT payer and have no duty to register for VAT,
2. your annual income has not exceeded 2,000,000 Kč,
3. you have no employment income (except income taxed by withholding tax),
4. you are not a partner in a v.o.s. or a general partner in a k.s. and are not insolvent.

The notification of entry into the flat-rate regime for 2026 had to be filed with the tax office no later than Monday 12 January 2026 (the statutory deadline of 10 January fell on a weekend). A change of band is reported in the same period. The advance payment is then due by the 20th day of the given month.

Warning: If you have many credits (children, spouse, mortgage), you lose them under flat-rate tax; only the taxpayer credit is counted in the flat rate. For someone with three children and a mortgage, a standard tax return can be much cheaper even though it involves more paperwork.

VAT limit: 2 million crowns

The 2,000,000 Kč threshold appears repeatedly in self-employed taxation, and not by accident. It is:

• the cap for flat-rate tax and for the highest caps on lump-sum expense allowances,
• and also the limit for compulsory VAT registration.

You must become a VAT payer when turnover exceeds 2,000,000 Kč in a calendar year (January-December). From 2025, turnover is tracked by calendar year, not over 12 consecutive months. When 2,000,000 Kč is exceeded, you become a payer from 1 January of the following year; if turnover also exceeds 2,536,500 Kč, you become a payer already on the day after it is exceeded. You file the registration application with the tax office within 10 working days after exceeding the turnover. This also means you lose entitlement to flat-rate tax.

There is also voluntary VAT registration. It makes sense if you buy many goods or services from other VAT payers and want to claim input VAT deductions.

One more good thing for 2026: EET does not apply. Electronic sales records were abolished as of 1 January 2023. In February 2026 the Ministry of Finance announced a proposal for a modernised system (EET 2.0) from 1 January 2027, but for now it is only a proposal in the legislative process, so check the status with the Tax Administration.

Tax-return and statement deadlines 2026

If you are not in the flat-rate regime, after the end of the year you face three filings: a tax return, a statement for OSSZ and a statement for your health insurance company.

Tax return for 2025

Anyone with an established and accessible data box (datová schránka) must file exclusively electronically. The return goes to the tax office, most simply through the MOJE daně portal.

Statements for insurers

The income and expenses statement (přehled) for OSSZ and for the health insurance company is filed within 1 month after the tax-return deadline. With an electronic return, this is usually around the beginning of June 2026. Any insurance underpayment is due within 8 days after the statement is filed.

Tip: After filing the statements, the amount of advance payments for the next period changes according to actual profit. You pay the new, usually higher, advance already from the month in which you file the statement, so allow for it in your budget.

Example: expense allowance versus flat-rate tax on the same numbers

Theory is fine, but the calculator decides. Take a model self-employed person on an unrestricted trade (60% allowance), main activity, annual income of 1,200,000 Kč, with no children and no mortgage. Compare two paths.

Option A - standard return with a 60% lump-sum expense allowance:

• income 1,200,000 Kč, lump-sum expenses 60 % = 720,000 Kč,
• tax base = 480,000 Kč, tax 15 % = 72,000 Kč,
• after the taxpayer credit (30,840 Kč), tax of 41,160 Kč per year remains,
• plus compulsory insurance advance payments (at least 5,005 Kč social from 1 July 2026 + 3,306 Kč health = 8,311 Kč per month, although after the statement it is recalculated upwards according to actual profit).

Option B - flat-rate tax, band 1:

• one payment of 9,984 Kč per month, roughly 119,808 Kč per year,
• the amount already includes tax and both insurances, with no return and no statements.

For this self-employed person, the standard return is cheaper, because the 60% allowance significantly reduces the tax base and insurance is calculated from real, not flat-rate, profit. But if the same person had low actual expenses, high profit and no further credits, the balance could tip towards flat-rate tax, mainly because of the lower social insurance payment in band 1, which is calculated from the minimum.

Now the same with a craft trade (80% allowance) and income of 1,200,000 Kč: lump-sum expenses = 960,000 Kč, tax base only 240,000 Kč, tax 15 % = 36,000 Kč, and after the taxpayer credit 5,160 Kč in income tax. For a craftsperson with low actual costs, a standard return with an 80% allowance is practically unbeatable.

Warning: These calculations are model examples and simplified (they do not deal with minimum assessment bases in detail or all credits). They explain the logic, not your exact tax. For a real decision, use a current calculator or an adviser.

What pays off: summary

There is no universal answer, but there are patterns:

• Flat-rate tax makes sense when you have higher profit, few credits and do not want paperwork. You handle everything with one monthly payment.
• A standard return with a lump-sum expense allowance wins at lower income, for craft trades (80% allowance) and whenever you claim more credits: children, spouse, mortgage interest.
• A standard return with actual expenses is worth choosing only if you have genuinely high real costs (material, goods, sublease) exceeding the lump-sum expense allowance.

Before deciding, calculate both main options using your own figures for the past year. The difference is often thousands to tens of thousands of crowns per year. And because this is your money and a YMYL topic, in borderline cases a one-off consultation with a tax adviser or accountant is worth it and can pay for itself.

This article is for information only and does not replace individual tax advice. Always verify concrete amounts and deadlines with the Tax Administration, ČSSZ and your health insurance company, because legislation changes.