Cold progression returns: employees have to pay millions!

Austria faces a financial challenge, since the reintroduction of the cold progression from 2026 could lead to noticeable losses for many citizens. The cold progression was originally abolished in 2022, which led to a relief for taxpayers in 2023. However, at least one third of the income is no longer adapted to inflation, which means that employees often lose their wallets in the event of wage increases due to stagnating tax levels. According to the calculations of Dénes Kucera from the "Agenda Austria", the annual costs could be 360 million euros due to this measure, with the average earner losing 47 euros a year alone, while higher income classes are even more affected, a loss of EUR 4,000 is recorded with a gross income of EUR 80.

In order to round off the whole, the government announced numerous additional tax increases and adjustments, including the increase in tax levels by almost 4 percent in 2025. This reorganization affects all income tax rates, except that of the maximum tax rate of 55% for income from 1 million euros. This means that people remain more net wages without the tax burden increasing proportionally. The new tariff levels in the income range of EUR 13,308 to 103,072 euros create a broader relief while families with low incomes and single parents are supported by 60 euros per month.

New tax reforms and raising grants

The upcoming changes also provide for an increase in the daily and overnight money as well as the mileage allowance for business trips. The overnight money for domestic trips will be increased from 26.40 euros to 30 euros, while the overnight money receives an increase of 2 euros. In addition, the small business limit is increased to 55,000 euros, which should benefit many small companies. This not only tries to stabilize the economic situation, but also to relieve families and companies.