The Eco-Social Tax Reform 2022 - and thus also the wage and income tax reduction contained therein - was passed by the National Council on January 20th 2022. After the resolution in the Federal Council on February 3rd 2022, the only thing that remains to be done is to publish it in the Federal Law Gazette.
Following the reduction of the initial tax rate from 25% to 20% within the framework of the Economic Stimulus Act 2020, the second and third brackets of the wage and income tax are now also to be reduced within the framework of the Eco-Social Tax Reform 2022. As of July 1st 2022, the second bracket will be reduced from 35% to 30%, and then as of July 1st 2023, the third bracket will be reduced from 42% to 40%.
Since the income tax rate is based on calendar years, the reduction in the tax rate during the year is to be taken into account for calendar years 2022 and 2023 by means of a resulting mixed tax rate. For the entire calendar year 2022, a calculated mixed tax rate of 32.5% will be applied for the second tax bracket, and in calendar year 2023 a calculated mixed tax rate of 41% will be applied for the third tax bracket. In order to ensure that employees benefit from the tax rate reduction as soon as possible, the rate reduction is to be taken into account as part of a recalculation carried out by the employer as soon as possible - but no later than the end of May 2022 - until the law is promulgated in the Federal Law Gazette or until the payroll accounting software is adapted. This applies in any case for January 2022 and, depending on the duration of the adjustment, also for the following months until May 2022. This mandatory recalculation by the employer is only to be carried out for those taxpayers who are employees of the paying employer in the month of the recalculation.
The reduced tax rate of 30% with regard to the second tax bracket will thus be applied for the first time for salary payment periods ending after December 31st 2022, and the reduced tax rate of 40% with regard to the third tax bracket will be applied for the first time for salary payment periods ending after December 31st 2023.
Abonnieren Sie die neuesten Nachrichten von BDO.
Please fill out the following form to access the download.