Significant Income Polarization in Hungarian Society

In its series presenting the short- and long-term economic challenges facing the new Hungarian government, GKI Economic Research Co., examines the development of wealth and income inequalities this week.

One of the ways to measure income inequalities is the analysis by income deciles that divide the population, sorted by income, into ten equal parts (10% each). The first decile represents the poorest, and the tenth represents the richest 10%. Last year, the poorest groups, each accounting for 10% of the population, had at their disposal only 3% and 5% of total income, respectively.

Redirected incomes
Researchers point out that the intensification of inequalities was caused by the “perverse” income distribution mechanisms after 2010, which redirected incomes from the lower income groups to the upper strata. The instruments for this were the flat-rate tax system and the low taxation of capital and interest incomes, as well as making inheritance tax-exempt, which were further reinforced by personal income tax (PIT) allowances.

Furthermore, the winners of the transformation of the housing support system were also mostly the wealthier, just as public procurements increased the prosperity of a narrow group. This is clearly visible in the increase in the share of the top income decile (2025: 24%, 2010: 20%), and in the current 5.5% share of the top 1% (2010: 3.6%). Thus arose the situation where the income of the richest 1% exceeds that of the bottom decile of the population by 83%. In another cross-section, the income of the richest 20% (39%) is larger than that of the poorest 50% (31%). However, the further enrichment of the wealthiest was even greater than this, since foreign assets appear in these figures only to a limited extent.

“Who is poor, is the poorest”
In international comparison, the Hungarian income distribution shows a duality: while the relative position of the bottom 10% and bottom 50% corresponds to the European Union average, the situation of the poorer is slightly more favorable among the other Visegrád Four (V4) countries, that is, the Czech Republic, Poland and Slovakia.
But even in this case, it is true that “who is poor, is the poorest”: in 2025, the income of those reaching the highest income in the bottom income decile in Hungary was on average EUR 4,550, while in the Czech Republic it was double this, EUR 9,230. At the same time, the Polish (EUR 7,850) and Slovak (EUR 7,330) situations were also better. One could enter among the Hungarian wealthy (top income decile) with an annual income of EUR 16,670 in 2025, whereas this required EUR 25,390 in the Czech Republic, EUR 23,970 in Poland, and EUR 21,170 in Slovakia.

Wealth inequalities
Although net wealth inequalities have minimally decreased over the past decade, significant differences still persist. In Hungary, 50% of the total net wealth is concentrated in the hands of the top 10%, while the bottom 50% disposes over merely 10% of the total wealth.
The indicator of wealth inequalities is even more extreme than that of income inequalities. While the lowest-income earners barely make ends meet by the end of the month, the wealthier can invest and earn interest on their income, thereby generating further income and wealth. This is also well illustrated by the 2025 savings survey by the National Bank of Hungary (MNB). If we exclude real estate and other non-financial assets, the inequality of wealth distributions becomes even more pronounced, since the overwhelming majority of Hungarians live in their own real estate, which counts towards net wealth, but not towards financial wealth. In Hungary, 71% of total financial wealth is owned by the top 10%, while the bottom 50% owns merely 5%. Within this, for example, less than 5% of the stratum with a wealth of HUF 0–500,000 holds government securities, whereas among those with a financial wealth exceeding HUF 10 million, the proportion reaches 60%.

GKI researchers highlight that if the plans of the new government (such as the Asset Recovery Office and the raising of low pensions and earnings) are successfully implemented, income inequalities are likely to significantly decrease. Furthermore, the successful implementation of the reforms is a crucial step towards a more balanced and sustainable economic model, the analysis concludes.