At the end of the year, the federal government plans to introduce incentives to encourage retirees to keep working. A corresponding package is to be finalized by the Cabinet on Wednesday and then presented to the public by Chancellor Christian Stocker (ÖVP), Vice Chancellor Andreas Babler (SPÖ), and NEOS leader Beate Meinl-Reisinger. The previously planned flat tax has been postponed; instead, a tax-free allowance of €15,000 per year will be introduced.
Originally, a flat tax of 25 percent on additional earnings by retirees had been targeted, starting as early as January 2026. For the time being, however, this will not be implemented. Instead, a fixed tax-free allowance is to be introduced. According to reports by the Salzburger Nachrichten and Die Presse on Tuesday, the tax relief is now expected to take effect not on January 1, 2026, as initially planned, but on January 1, 2027.
Additional contributions could be extended
According to the reports, the allowance is to apply to both self-employed and salaried retirees. During earlier discussions about a flat tax, there had been disagreements between the ÖVP and the SPÖ on this point, as the SPÖ wanted the flat tax to apply only to salaried workers. A compromise appears to have been reached on the amount: the ÖVP-affiliated Seniors’ Association had called for up to €2,000 per month, while the SPÖ favored a maximum of €500 to €1,000.
According to Der Standard, the ÖVP is also considering extending additional contributions to the pension insurance system that have been paid for the past two years by people who continue working after retirement. The SPÖ is pushing to expand the incentive system so that companies are encouraged to hire people aged 60 and over. NEOS, meanwhile, are calling for a liberalization of the financing of the second pillar of the pension system.
