Austrian tax brackets will rise by nearly 4% next year, Chancellor Karl Nehammer announced on Thursday, as part of efforts to prevent taxpayers from being pushed into higher brackets due to wage increases.
The increase is part of a broader initiative to abolish the so-called “cold progression,” which adjusts tax thresholds annually to match inflation.
Starting in 2025, the new tax thresholds will be €13,308 for the first bracket, €21,617 for the second, €35,836 for the third, €69,166 for the fourth, and €103,072 for the fifth.
The move drew criticism from the opposition, including the Social Democrats (SPÖ), the Freedom Party (FPÖ) and NEOS. Gerald Loacker, NEOS’ economic and social spokesman, remarked: “Abolishing the cold progression is not a relief but simply avoiding a tax hike. The tax burden remains at a record high.”
Additional measures announced on Thursday include a permanent child allowance increase of €60 per month for low-income single parents, increased daily and overnight business travel allowances, and a rise in the tax-free living area for service apartments to 35 square metres.
The small business threshold will also rise to €55,000 from €35,000, addressing inconsistencies in turnover and income tax regulations.