Legislative update: relief measures in the context of the abolition of “bracket creep”
Effective from 1 January 2023, bracket creep was abolished in Austria. However, until now one third of the inflation has not been taken into account yet. On 15 September 2023, the Council of Ministers adopted a circular resolution (MRV 69a/1) on this matter, outlining the basics of the new relief measures. The competent Federal Ministries are preparing the respective legislative proposals which are expected to enter into force as of 1 January 2024.
Adjustment of tax brackets and profit allowance
The first four tax brackets are adjusted progressively to the inflation rate:
| 2023 | 2024 |
| up to EUR 11,693 | up to EUR 12,816 |
| EUR 11,693 – EUR 19,134 | EUR 12,816 – EUR 20,818 |
| EUR 19,134 – EUR 32,075 | EUR 20,818 – EUR 34,513 |
| EUR 32,075 – EUR 62,080 | EUR 34,513 – EUR 66,612 |
Furthermore, the profit allowance (zero-bracket amount) will be increased from EUR 30,000 to EUR 33,000.
Increase of tax advantages for bonuses
Tax advantages for special payments for overtime will be extended. The monthly tax-free allowance will be increased from EUR 86 to EUR 120. Additionally, for the first 18 hours of overtime in one month (for 2024 and 2025) a monthly tax-free allowance of EUR 200 will be introduced, which will be re-evaluated after this time limit has expired.
Tax advantages for dirty, demanding and dangerous work as well as special payments for working on Sundays, public holidays or at night will be increased from currently EUR 360 to EUR 400 per month.
The provisions regarding working from home will be prolonged for an indefinite period of time.
Increase of family benefits
The additional child allowance will be increased from EUR 550 to EUR 700 per month. The childcare subsidy that employers may grant tax-free to their employees for children up to age 14 will be doubled from EUR 1,000 to EUR 2,000. Additionally, children may in future attend corporate nurseries at a lower cost or free of charge even if their parents do not work for the respective company.
Moreover, on 20 September 2023 the Austrian National Council adopted the following resolutions:
The family time bonus, meaning the financial support for fathers who take care of their family immediately after birth will in future amount to EUR 47.82 per day, thus being doubled. Furthermore, a special child subsidy amounting to EUR 60 per child will be introduced for households at risk of poverty.
It remains to be seen how the respective legislative proposals on the planned measures will be implemented. The circular resolution adopted by the Council of Ministers marks an important milestone regarding tax reliefs for employees and families.
