Austria

Inflation adjustment: Cold progression/bracket creep

From 1 January 2023 on, the effect of the cold progression should be counteracted as far as possible.

For this reason, each year many tax-relevant tax brackets, standard deductions, fixed payments, etc. will be valorised on an annual basis. The increase of the corresponding amounts is based on the inflation for the period June to May of the current year (arithmetic average).

2/3 of the calculated percentage will be used to increase the corresponding values as per 1 January of the next following year. The amounts that will be amended have to be announce via an ordinance by 31 August of the current year for the following year.

The tax rates will not be amended, only the applicable tax brackets.

Key tax changes for 2026:

• The annual "commuter euro" allowance for employees increases from EUR 2 to EUR 6 per kilometer.
• The EUR 30 flat-rate reimbursement for charging company e-cars at home ends in 2026; reimbursement will instead be based on actual costs.
• Inflation-based indexing for many family benefits, such as the family allowance and child tax credit, will be suspended for 2026 and 2027.
• A VAT exemption is applied to contraceptives and female hygiene products.
• From September 2025, electronic delivery of tax documents via FinanzOnline becomes mandatory for VAT filers.