How to Legally Reduce Your Taxes: 10 Tips for the Self-Employed in 2026

Tax optimization isn't fraud — it's making smart use of the options the law gives you. Many OSVČ end up paying more in taxes than they need to, simply because they're not taking advantage of all the available credits, deductions, and strategic approaches. In this article, we'll walk through 10 specific and completely legal ways to reduce your tax liability.

All information is based on the legislation in effect for 2026. For current rates and limits, we recommend checking the official website of the Czech Financial Administration.

Tip 1: Choose the Right Expense Method

This is the most fundamental decision affecting how much tax you'll pay. You have two options:

Actual Expenses

You claim exactly the expenses you actually incurred to generate, secure, and maintain your income. You must have a receipt or document for every expense.

Flat-Rate Expenses (Percentage of Revenue)

Instead of documenting actual expenses, you apply a set percentage of your revenue:

• 80% of income from agricultural production, forestry, water management, and craft trade income
• 60% of income from other trades
• 40% of income from other self-employment (e.g. doctors, lawyers, tax advisors) — max. 800,000 CZK
• 30% of rental income — max. 600,000 CZK

Flat-Rate Tax — A Special Regime

Since 2021, there has been a flat-rate tax option, where OSVČ pay a single monthly advance payment covering income tax, social insurance, and health insurance. For 2026, the limits and amounts are subject to change — check the current conditions at financnisprava.gov.cz.

Conditions for the flat-rate tax:

• Revenue below the set limit (three bands are defined for 2026)
• You are not a VAT payer
• You have no employment income (except for small-scale work agreements within the limit)
• You are not a partner in a general partnership

Tip 2: Claim All Available Tax Credits

Tax credits are deducted directly from your calculated tax, not from your tax base. This means a credit of 30,840 CZK reduces your tax bill by exactly 30,840 CZK.

Basic Taxpayer Credit

Every taxpayer is entitled to the basic tax credit. For 2026, this amounts to 30,840 CZK per year (2,570 CZK per month). Everyone claims this credit automatically.

Spouse Tax Credit

If your spouse's own income does not exceed 68,000 CZK per year, you can claim a credit of 24,840 CZK. If your spouse also holds a ZTP/P disability card, the credit doubles to 49,680 CZK.

The following are not counted as your spouse's income:

• State social support benefits
• Parental allowance
• Housing benefit
• Foster care benefits

Disability Tax Credit

• Disability grade 1 or 2: 2,520 CZK
• Disability grade 3: 5,040 CZK
• ZTP/P disability card holder: 16,140 CZK

Student Tax Credit

If you are continuously preparing for your future career through full-time study (up to age 26, or up to age 28 for doctoral studies): 4,020 CZK.

Childcare Credit (Preschool Fees)

For each dependent child, you can claim a credit equal to the proven expenses paid for placing the child in a preschool facility, up to a maximum of the applicable minimum wage for the given year.

Tip 3: Maximize the Child Tax Benefit

The tax benefit for dependent children is one of the most powerful tax optimization tools available. It works as a tax credit and can even result in a tax bonus — meaning the state actually pays money back to you.

Annual child tax benefit amounts:

• 1st child: 15,204 CZK
• 2nd child: 22,320 CZK
• 3rd and each additional child: 27,840 CZK

If a child holds a ZTP/P disability card, the benefit is doubled.

Tip 4: Take Advantage of the Pension Savings Deduction

Contributions to pension savings (supplementary pension savings or a transformed fund) can be deducted from your tax base. You can deduct the amount exceeding 1,000 CZK per month (12,000 CZK per year), up to a maximum of 24,000 CZK per year.

Optimal strategy:

To make the most of the deduction, contribute 3,000 CZK per month to your pension savings:

• Annual contribution: 36,000 CZK
• Deductible portion: 36,000 - 12,000 = 24,000 CZK (maximum)
• Tax savings at 15%: 3,600 CZK
• Tax savings at 23%: 5,520 CZK

Additionally, if an employer-employee relationship allows for employer contributions, that's an added benefit. As an OSVČ, however, you save on your own.

Tip 5: Life Insurance Deduction

Similar to pension savings, you can deduct premiums paid for private life insurance, up to a maximum of 24,000 CZK per year.

Conditions:

• The policy must not allow extraordinary withdrawals
• The insurance must run at least until the age of 60
• Minimum policy duration of 60 months

Savings: With the maximum deduction of 24,000 CZK and a 15% tax rate, you save 3,600 CZK on your taxes.

Tip 6: Depreciate Assets Correctly

If you've acquired assets for your business (a computer, car, machinery, furniture), you generally can't deduct the full cost as an expense all at once (except for minor assets). You must depreciate them.

Minor Tangible Assets

Assets with an acquisition cost of up to 80,000 CZK (and a useful life of more than 1 year) can be included in expenses as a one-time deduction in the year of acquisition, or depreciated at your discretion.

Tangible Assets Over 80,000 CZK

Assets worth more than 80,000 CZK must be depreciated according to depreciation categories:

| Depreciation Category | Depreciation Period | Examples | |---|---|---| | 1 | 3 years | Computers, mobile phones, office equipment | | 2 | 5 years | Passenger cars, furniture | | 3 | 10 years | Metal structures, turbines | | 4 | 20 years | Timber and plastic buildings | | 5 | 30 years | Buildings, roads | | 6 | 50 years | Office buildings, hotels |

Straight-Line vs. Accelerated Depreciation

You have the choice:

• Straight-line depreciation: Roughly equal amounts each year (lower in the first year)
• Accelerated depreciation: Higher deductions in the early years, gradually decreasing

Tip 7: Claim the Flat-Rate Transport Allowance

If you use a personal vehicle for business purposes, you have two options:

Actual Transport Expenses

You claim all actual costs: fuel, insurance, repairs, parking, motorway vignette. You must keep a logbook.

Flat-Rate Transport Allowance

Instead of keeping a logbook and documenting actual fuel costs, you can claim a flat rate of 5,000 CZK per month (60,000 CZK per year) per vehicle used for business (up to 3 vehicles).

Conditions:

• You must not allow another person (including an employee) to use the vehicle
• If you also use the vehicle for personal purposes, the flat rate is 4,000 CZK per month (80% of 5,000 CZK), and you must also reduce other vehicle-related expenses by 20%

Tip 8: Deducting Home Office Expenses

If you work from home, you can claim a proportional share of your housing costs as a business expense.

What You Can Claim

• Rent (proportional share)
• Utilities (electricity, gas, water)
• Internet
• Property insurance (proportional share)

How to Determine the Ratio

The ratio is typically calculated based on the proportion of floor space used for business purposes relative to the total floor area of your flat or house.

Example: Flat of 80 m², home office of 16 m² = ratio of 20%.

• Monthly rent: 15,000 CZK × 20% = 3,000 CZK in expenses
• Utilities: 3,000 CZK × 20% = 600 CZK in expenses
• Internet: 600 CZK × 100% (if used exclusively for business) or proportionally
• Annual expense deduction: approx. 43,200 CZK
• Tax savings (15%): 6,480 CZK

Tip 9: Deductions for Education and Professional Development

Expenses on education related to your business are tax-deductible. These include:

• Professional courses and training
• Conferences and seminars
• Professional literature and subscriptions
• Educational software
• Language courses (if related to your business)
• Travel to educational events

Conditions for Deductibility

The key requirement is a direct connection to your business activities. A cooking course for an IT consultant would likely not be accepted, but a project management course would.

Examples of deductible educational expenses:

• Programmer: courses in new technologies, conferences, professional books
• Tradesperson: certification courses, safety training
• Marketer: digital marketing courses, conferences
• Accountant: update training, professional publications

Tip 10: Charitable Donations

Donations (non-monetary contributions) to purposes defined by law can be deducted from your tax base.

Conditions

• Minimum donation amount: 1,000 CZK or 2% of the tax base (only one condition needs to be met)
• Maximum deduction: 15% of the tax base
• The recipient must be a legally defined organization (municipalities, regions, state bodies, legal entities based in the Czech Republic for legally specified purposes)

Blood Donation

For each blood donation, you can deduct 3,000 CZK from your tax base. For plasma donation, also 3,000 CZK per donation. For hematopoietic stem cell donation, 20,000 CZK.

Summary Overview of Savings

Let's recap how much you can realistically save by making use of all available tools:

Keeping Your Expenses Under Control with DokladBot

To take full advantage of all the deductions and expenses mentioned above, you need to keep clear and organized records. DokladBot helps you track expenses on an ongoing basis — via WhatsApp, with no year-end stress. Just snap a photo of your receipt, send it, and DokladBot automatically processes and categorizes it. By the end of the year, you have a complete overview of your expenses ready for your tax return.

Start tracking your expenses the smart way with DokladBot — so that come year-end, you know exactly how much you've saved.

Frequently Asked Questions (FAQ)

Can I combine flat-rate expenses with actual asset depreciation?

No. If you opt for flat-rate expenses, you cannot simultaneously claim depreciation, the flat-rate transport allowance, or home office expenses. Flat-rate expenses are intended to cover all expenses. However, you can still claim tax credits and non-taxable deductions (pension savings, life insurance, donations).

Is it worth switching from flat-rate to actual expenses just for depreciation?

It depends on the level of depreciation and actual expenses compared to the flat rate. If you have assets with significant depreciation and other sizeable expenses, switching to actual expenses may well be worth it. Calculate both options and compare.

Can I change my expense method every year?

Yes, you can change your method each year. However, be aware that when switching between flat-rate and actual expenses (in either direction), you must adjust the previous year's tax base to account for outstanding receivables and payables.

Who can claim the child tax bonus?

The tax bonus (receiving a benefit payout exceeding the tax liability) can be claimed by a taxpayer whose income is at least six times the minimum wage. For OSVČ, this is calculated based on business income, not profit.

Can the flat-rate transport allowance be applied to a motorcycle?

Yes, the flat-rate transport allowance can be applied to any road motor vehicle — a passenger car, motorcycle, or van.

Can I deduct the cost of work clothing?

Only if it involves specific work attire (protective gear, uniforms, specialist footwear). Regular clothing, even if worn exclusively for work, is not a tax-deductible expense.

How do I prove home office expenses?

You need proof of rent or utility payments and a document establishing the proportion of business use (such as a written note defining the workspace with its floor area). Some tax offices accept a statutory declaration, while others may require a lease agreement or a property register extract.

Is blood donation really tax-advantageous?

Yes. For each blood donation, you deduct 3,000 CZK from your tax base. With 4 donations per year, that's a 12,000 CZK deduction, which at a 15% tax rate translates to 1,800 CZK in tax savings. Plus, you're doing a good deed.