What is the average wage for 2024? How is it calculated and what does its level affect?
Average wage for 2024 and its calculation
On 22 September 2023, a Government Decree was published in the Collection of Laws, Part 135 No. 286/2023 Coll., on the amount of the general assessment base for 2022, the conversion coefficient for adjusting the general assessment base for 2022, the reduction thresholds for determining the calculation base for 2024, the basic pension assessment set for 2024 and the amount of the increase for a brought-up child for 2024, and the increase in pensions in 2024.
This legislation sets out the variables from which the average wage for 2024 will be calculated. The first variable is the amount of the general assessment base for 2022, which is the amount 40.638 CZK. The second is the amount of the conversion factor to adjust this general assessment base for 2022, which is 1,0819.
Multiplying these two values gives the average wage for 2024.
Calculation of the average wage
40.638 CZK x 1,0819 = 43 967 CZK (rounded up to the nearest whole crown)
Average wage for 2024 is 43.967 CZK.
What all will affect the average wage in 2024?
1. Tax rate
The tax rate according to Section 16(1) of Act No. 586/1992 Coll., on Personal Income Taxes
- 15 % for part of the tax base up to 36 times the average wage (up to and including CZK 1,582,812)
- 23 % for part of the tax base exceeding 36 times the average wage (exceeding CZK 1,582,812).
In 2023, the threshold between the two tax rates is 48 times the average wage. The consolidation package brought an innovation in the form of a change to this threshold. As of 1 January 2024, the threshold between the tax rates under the progressive taxation method will be 36 times the average wage.
2. Method of taxation
For a taxpayer who has made a tax declaration with their taxpayer, the following method of taxation will apply in 2024:
- 15 % for part of the tax base up to 3 times the average wage (for the year 2024 this amount is 131.901 CZK)
- 23 % for part of the tax base above 3 times the average wage (for 2024, the amount is over CZK 131,901).
In 2023, the threshold between these two rates is 4 times the average wage.
3. Withholding tax
Employees who have not made a tax declaration to their tax payer and who also have
- income from the agreement with a value from CZK 1 to CZK 10,000 inclusive
- other earnings from dependent activities from CZK 1 to CZK 4,000 inclusive
these earnings subject to withholding tax 15 %.
The change will take place from the new year for the applicable amount for a work performance agreement. This is due to the amendment of Section 6(4)(a), which, with effect from 1 January 2011, provides for a new version of the new Article 6(4)(a). January 2024, it is stipulated that a separate tax base for taxation by withholding tax at a special tax rate (withholding tax) is income derived from a work performance agreement, the aggregate amount of which with the same taxpayer does not exceed, for a calendar month, the amount determined for the participation of employees working under a work performance agreement in sickness insurance, which is determined for employment performed under such agreements with the same employer.
How to determine the amount applicable to sickness insurance for jobs performed on the basis of work performance agreements with the same employer is described in the next section of this article.
4. Participation in sickness insurance
Amount the relevant income for participation in sickness insurance is CZK 4,000 in 2024. I would like to remind you that the amount of money that qualifies for participation in sickness insurance is one tenth of the average wage rounded down to the nearest five hundred crowns (Section 6(2) of Act No 187/2006 Coll., on sickness insurance).
Decisive amount for the insurance of employees working on the basis of agreements on the performance of work with the same employer in a calendar month is 25 % of the average wage pursuant to Section 23b(4) of the Act on Social Security Contributions and State Employment Policy Contributions, rounded down to the nearest 500 crowns.
25 % of CZK 43,967 = CZK 10,992 (rounded down to the nearest 500 crowns) 10.500 CZK)
When carrying out employment on the basis of multi-employer agreements in a calendar month is the decisive amountfor participation in sickness insurance 40 % average wages pursuant to Section 23b(4) of the Act on Social Security Contributions and State Employment Policy Contributions, rounded down to the nearest 500 crowns.
40 % of CZK 43,967 = CZK 17,587 (rounded down to the nearest 500 crowns) 17.500 CZK)
The decisive amount for insuring employees working on the basis of a work performance agreement has been changed by amendment to Act No.187/2006 Coll., with effect from 1 July 2024 on the basis of the consolidation package.
5. Maximum assessment base
The maximum assessment base for social security contributions is 48 times the average wage. For 2024, the maximum assessment base is CZK 2,110,416 (43.967 CZK x 48).
6. Reduction threshold for sick leave
The reduction thresholds for the calculation of sickness insurance benefits and for the calculation of wage compensation for DPN and quarantine are based on average wages.
TIP: To find out what the reduction thresholds are for 2024, see blog article here ->
7. Average wage in health insurance
Average wage affects Participation Some groups of employees on health insurance. These groups are:
- persons working on the basis of an employment contract, multiple employment contracts with the same employer, if applicable
- members of the cooperative, who are not in an employment relationship with the cooperative but perform work for the cooperative for which they are remunerated
- volunteer workers care services.
They are considered employees for health insurance purposes if they earn countable income in a calendar month. The countable income for health insurance purposes is CZK 4,000 in 2024. The amount of countable income is based on the average wage.
8. Thresholds for tax exemption of employee benefits
As of 2024, the the threshold for tax exemption employee benefits (Section 6(9)(d) of Act No. 586/1992 Coll., on Income Taxes) half the average wage. The limit is CZK 21,983 from 2024.
AVENSIO SW programme
All the changes and values described above will be incorporated into the programme in due course AVENSIO SW for payroll processing for the month of January 2024.
