Czech employee income tax uses two rates, but the higher rate does not apply to the employee's entire salary once the threshold is crossed. In 2026, payroll advances are calculated at 15% up to the monthly threshold and 23% on the portion above it.
The Financial Administration states that the monthly threshold for 2026 is CZK 146,901, based on three times the statutory average wage of CZK 48,967.
The higher rate applies only to the excess
An employee earning above CZK 146,901 per month does not suddenly pay 23% on the entire tax base. The 23% rate applies to the amount above the threshold, while the lower portion remains taxed at 15% under the payroll-advance calculation.
That makes the system different from a single cliff-edge tax rate.
Tax credits affect take-home pay
The standard taxpayer credit can reduce the amount of income tax ultimately withheld where the employee is eligible and has completed the required taxpayer declaration. Other credits and allowances can also affect individual outcomes.
For international hires, tax residence and treaty status can change which credits are available and how foreign income is treated.
Employers should not confuse payroll tax with social insurance
Income-tax withholding, employee social insurance and employee health insurance are separate deductions. Employers then add their own social and health contributions on top of gross salary.
A proper cost model therefore needs three layers: gross pay, employee deductions and employer-funded on-costs.