From July 1, 2024, new benefits for employees and disadvantages for people without income and employers

As of July 1, 2024, a number of important legislative changes will have a significant impact on the financial situation of employees, people without income and those who want to supplement their pension contributions.

Increase in basic personal allowance

With the increase in the gross minimum wage to 3,700 lei, the basic personal deduction will be increased. This deduction is applicable to income from salaries and is intended to reduce the tax base, and thus also the income tax payable by employees. The lower the gross salary (or the more dependants the employee has), the higher the personal deduction, which means that low-income employees will benefit from a larger reduction in income tax.

Increase health contributions for those without income

People with no income who wish to take optional insurance in the public health system (and be insured for 12 months) will have to pay higher amounts from July 1, 2024. The social health insurance contribution (CASS) for voluntary insurance is set at 10% of six gross minimum wages. Thus, with the increase in the minimum wage, the amount payable for CASS increases to 2,220 lei per year, up from 1,980 lei previously.

An important step that this category of people must take is to submit the single declaration on income tax and social contributions due by individuals. As stipulated in the Tax Code, the insurance becomes effective as soon as the declaration is submitted, but it is also necessary to conclude an insurance contract with the health insurance company.

Higher costs to buy pension seniority

For people who want to top up their pension contributions by taking out social insurance contracts, the amount to be paid will increase. The social insurance contribution (CAS) is also calculated on the basis of the gross national minimum wage, so from July 1, 2024, the cost of buying seniority will increase. Those who wish to insure their seniority for a past period (of no more than six years preceding the month in which an insurance contract is concluded) will have to pay 25% of six gross minimum wages, i.e. RON 5,550, compared to RON 5,100 before the increase.

Even if the minimum wage or the CAS rate changes, under the provisions in force, existing insurance contracts are not affected.

Overworking part-time contracts

For employees with part-time contracts, new rules on social security contributions apply from July 2024. From this date, social security (CAS) and health (CASS) contributions will be payable at the level of a minimum gross salary of RON 3,400 (of the RON 3,700 minimum gross salary, RON 300 is non-taxable and is not counted towards the ceiling), regardless of the number of hours worked. The difference between the CAS and CASS rate for the income actually earned and the CAS and CASS rate for a gross salary of 3,400 lei is borne by the employer for part-time employees.

These legislative changes will have a significant impact on employees’ disposable incomes and on people who voluntarily join the public health system or buy their seniority for retirement. The increase in the gross minimum wage, while benefiting low-paid employees, also implies additional costs for other categories of people, such as day workers, part-timers and people without income who pay voluntary contributions.