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.

In May 2025 a draft for the new Budget Accompanying Act has been proposed. It will stricter real estate transfer tax regulations on share deals, adjusting participation thresholds, and extending applicability to corporations. There's a 30% rezoning surcharge on property sales, capped by sale proceeds. For self-employed individuals, increased revenue caps and flat-rate business expenses are set for 2025 and 2026. A tax-free employee bonus of up to 1,000 euros is introduced for 2025. The foundation entry tax rate rises to 3.5% in 2026. VAT exemptions will apply to contraceptives and female hygiene products from 2026. Changes in commuter allowances and social insurance refunds are planned, with family benefits adjustments and limited inflation indexing starting in 2026. From September 2025, electronic delivery of tax documents via FinanzOnline becomes mandatory for VAT filers.