In the coming year, the Austrian population will be relieved by almost EUR 2 billion due to the abolition of cold progression. This means that people will receive higher wages without having to pay more tax - leaving them with more net income.
By abolishing cold progression, people will be compensated for the additional annual burden caused by inflation. This is expressed in the fact that the main tariff elements and deductions are automatically adjusted by two thirds of the inflation rate and the remaining third is compensated by the relief measures agreed in the Council of Ministers' resolution.
The inflation rate to be compensated in 2025 is 5%, which is calculated as the average of the annual inflation rates over the months of July 2023 to June 2024.
The planned total volume of tax relief in 2024/25 amounts to EUR 1.989 billion, two thirds of which (EUR 1.338 billion) will be used to automatically increase the income tax rate brackets by 3.33%.
The threshold amounts applicable to the first 5 tariff levels are to be adjusted by a further 0.5 percentage points, so that in total
Furthermore, the deductible amounts, including the associated income and deduction limits, as well as the social security reimbursement and the social security bonus will be fully adjusted to the inflation rate.
The remaining third, EUR 651 million, will be offset as part of the Progression Settlement Act 2025, which has yet to be legally drafted, whereby the federal government would like to pay particular attention to the top performers in our country and support families with children. The following measures are to be implemented:
By abolishing cold progression, people will be compensated for the additional annual burden caused by inflation. This is expressed in the fact that the main tariff elements and deductions are automatically adjusted by two thirds of the inflation rate and the remaining third is compensated by the relief measures agreed in the Council of Ministers' resolution.
The inflation rate to be compensated in 2025 is 5%, which is calculated as the average of the annual inflation rates over the months of July 2023 to June 2024.
The planned total volume of tax relief in 2024/25 amounts to EUR 1.989 billion, two thirds of which (EUR 1.338 billion) will be used to automatically increase the income tax rate brackets by 3.33%.
The threshold amounts applicable to the first 5 tariff levels are to be adjusted by a further 0.5 percentage points, so that in total
- the first tariff level to EUR 13,308,
- the second tariff level to EUR 21,617,
- the third tariff level to EUR 35,836,
- the fourth tariff level to EUR 69,166 and
- the fifth tariff level rises to EUR 103,072.
Furthermore, the deductible amounts, including the associated income and deduction limits, as well as the social security reimbursement and the social security bonus will be fully adjusted to the inflation rate.
The remaining third, EUR 651 million, will be offset as part of the Progression Settlement Act 2025, which has yet to be legally drafted, whereby the federal government would like to pay particular attention to the top performers in our country and support families with children. The following measures are to be implemented:
- Daily allowances (for domestic travel) will be increased from EUR 26.40 to EUR 30 and overnight allowances from EUR 15 to EUR 17.
- The mileage allowance for cars, motorcycles and bicycles will be uniformly increased to EUR 0.50 per kilometer. Currently, the mileage allowance is EUR 0.42 for cars, EUR 0.24 for motorcycles and EUR 0.38 for bicycles. An amount of EUR 0.15 per kilometer can be claimed for passengers. In addition, the current upper limit for the mileage allowance for bicycles is to be doubled from 1,500 to 3,000 kilometers per year, while the lower limit for pedestrians is to be halved to 1 kilometer.
- In order to make the use of public transport more attractive, the transport allowances for business trips are to be increased and clearly regulated, with EUR 0.50 for the first 50 kilometers, EUR 0.20 for the next 250 kilometers and EUR 0.10 for each additional kilometer.
- The exemption limits for other remuneration (in particular vacation and Christmas bonuses) will be valorized by ensuring an automatic annual adjustment from 2025.
- In order to support small businesses, the small business threshold for income tax and VAT will be increased from EUR 35,000 to EUR 55,000.
- In order to meet the needs of many employees, the tax-free living space for company apartments is to be increased from 30m² to 35m² on the one hand and, on the other hand, an aliquotment per employee per residential unit is to be provided for instead of the complete allocation of common rooms.
- In order to combat child poverty and promote equal opportunities, low-income households with children (employed sole earners and single parents with an annual income of (currently) up to EUR 24,500) are to be relieved in the form of a deduction of EUR 60 per child per month.
Autorin:
Viktoria Drapak |