Recent income tax developments in connection with the government programme 2025 to 2029

On 27 February 2025, the new federal government presented the common government programme for 2025-2029 named “Do the right thing now. For Austria.” (Jetzt das Richtige tun. Für Österreich.). By means of comprehensive measures, the Austrian Income Tax Act, payroll accounting and the employee tax assessment are simplified.

Income tax

• Extension of the maximum tax rate of 55% for 4 years
• Compensation of the bracket creep by suspending one third of the inflation adjustment of the income tax rate
• Strengthening the competitiveness by reducing the non-wage labour costs and by introducing a gradual tax relief within the Family Burden Equalisation Fund
• Improved tax-exempt employee bonus
• Preferential tax treatment of overtime and surcharges
• Higher tax-exempt amount for other remuneration (holiday pay and Christmas bonus)
• Evaluation of tax exemptions for bonuses from the employer to the employee (company events, tax-exempt vouchers for employees)
• Practicable arrangement of the provisions regarding lump sums for tips
• Reduction of mileage allowance for bikes and motorcycles to 25 cents
• Elimination of the “Klimabonus” and introduction of a partial compensation for commuters
• Development of a model for additional income for individuals in genuine old-age pension
• Increase of the tax-exempt amount for payments regarding the private pension
• Compulsory health insurance for marginally employed staff
• Simplification, debureaucratisation and digitalisation of payroll accounting and the employee tax assessment
• Improvement of the provisions regarding benefits in kind for housing, non-cash benefits for childcare and discounts for employees

International Tax Law

• Simplification and acceleration of withholding tax refunds for cross-border tax assessments through implementation of the FASTER Directive
• More effective structuring of exit taxation
• Creation of coordinated and legally watertight framework conditions for cross-border home office

These amendments, presented as an overview, are just an extract from the detailed political negotiations. The further legislative realisation is to be expected. We will inform you as soon as the planned legislation is passed.