Tax credits and deductions: how to reduce income tax to the minimum?

Do you file your own personal income tax return? By correctly claiming tax credits and deductions, you can save significantly on your income tax. We’ll explain the difference between tax credits and deductions, how to claim them, and what documentation you’ll need to provide.

The difference between tax deductions and credits

Tax credits and deductions are tools that help reduce income tax, but each works differently.

How do they differ?

When filing your tax return, you can combine both methods to maximize your tax benefits. After subtracting tax deductions from the tax base, you can estimate your income tax. You can then reduce this amount by claiming tax credits.

All individuals and self-employed persons can claim tax credits and deductions. As a self-employed person under the flat-rate tax regime, you do not apply these benefits because you do not file a tax return, with the exception of these 5 situations.

What tax deductions can you claim in 2026?

Both self-employed individuals and employees can take advantage of tax deductions. We have summarized all tax-deductible items for 2026 in the table below. For each item, you will find the maximum amounts you can deduct from your tax base, the conditions for claiming the deduction, and what documentation is required.

Starting in 2024, a new combined annual limit of CZK 48,000 applies to tax-advantaged retirement savings products, which include:

• Life insurance – if it includes a savings component, such as investment, endowment, or pension insurance.
• Long-term care insurance – in the event of illness or loss of self-sufficiency.
• Long-term investment product (DIP) – for example, investments in stocks, bonds, mutual funds, or conservative savings in deposit accounts.
• Pension savings – includes supplementary pension insurance and supplementary pension savings.

For supplementary pension insurance, only the portion of contributions exceeding the set limit— over CZK 1,700 per month—is included in the deduction.

How do tax deductions for self-employed individuals work?

In addition to non-taxable deductions, as a self-employed individual, you can also reduce your tax base using deductible items if you maintain tax records or accounting.

What can be deducted?

• Tax losses reported in previous years.
• Costs of professional training, such as funding internships for students and apprentices.

What tax credits can you claim in 2026?

Just like deductions, tax credits can also be claimed by taxpayers who have income from business or employment. Below you will find an overview of these credits and the conditions for claiming them.

If you become eligible for a credit during the year, you may claim only a prorated portion of the credit based on the corresponding number of months. For example, if your child is born in September, you are eligible for the child tax credit for the 4 months remaining until the end of the year.

In 2024, the tax credit for students and preschool tuition was eliminated; other credits remain in effect.

How to claim tax credits and deductions?

While employees have their credits applied by the payroll department, self-employed individuals must handle them themselves. However, both groups have one thing in common—if they miss the deadline for filing their tax return or fail to submit the correct documents, they will not be able to claim the credits.

Self-employed individuals claim them on their tax return

As a self-employed person, you must claim all tax credits and deductions yourself in your tax return —this provides the tax office with a summary of your business activities for the past year.

• In the return, you will list your income, expenses, and tax base, then subtract the non-taxable portions of the tax base and claim the credits.
• The easiest way is to fill out and submit the form via the Moje daně portal, including the attachments that document your eligibility for deductions and credits.
• The final step after submitting the tax form is to pay the calculated tax into the correct account using the correct variable and constant symbols.

Employees request from their employer

• By signing the Income Taxpayer Declaration

When you start a new job and then at the beginning of each year, you’ll signtheso-called“pink form”— the Personal Income Tax Return for Dependent Employment—where you’ll check the tax credits you’re eligible for (such as the taxpayer credit). Your employer then takes these credits into account each month when calculating your net pay.

• Request for an Annual Tax Settlement

If you want to reduce your tax by the interest paid on loans or retirement savings contributions, ask your employer for an annual tax settlement. Submit the request along with proof of the amounts paid by February 15 at the latest. Your employer will process the settlement and reimburse any overpayment in your March paycheck.

Are you confused about tax credits and deductions?

By properly claiming tax credits and deductions, you can save thousands of crowns a year. Not sure what can reduce your income tax? Leave your entire tax return to the experts. Contact us via the form below, and together we’ll find a way to help you.