Cost of living For Members

EXPLAINED: How Austria's new finance measures could benefit you

Amanda Previdelli
Amanda Previdelli - [email protected]
EXPLAINED: How Austria's new finance measures could benefit you
Austria's wide-ranging tax reform is designed to help workers keep more of the money they earn, as cost of living rises. Photo by Markus Spiske / Unsplash.

Austria has announced a €6 billion package to fight the impact of rising cost of living on residents. Here is what you should know about what's planned and whether you can benefit.


Austria's federal government unveiled a series of measures worth billions of euros to fight the cost of living crisis. New steps include increasing family allowances, cutting taxes and one-off welfare payouts, as The Local has reported.

Some €5 billion is set aside for payments aimed at the public and households, whilst €1 billion is designated for entrepreneurs.

READ ALSO: Austria unveils €6 billion package to fight rising cost of living

A large part of the package is earmarked for increased social benefit payments - especially family allowances, and some could come already in summer.


However, most of the measures should be in place by October, and changes in the so-called "cold progression" ( the term used to describe increases in tax burdens which are based on increases in income but do not account for inflation) will come next year.

Here's what will change for residents?

Higher payments and new payouts

One of the main short-term measures is the increase in benefits and one-off welfare payments.

Every resident in Austria will receive a €500 payment expected for autumn, possibly October. Children should receive half of this amount.

This payment is tied to Austria's planned "Klimabonus" payments meant to offset the costs of a CO2 tax that has not yet been implemented in the country. It was initially set at €200 per person before being increased.

In August, there will be an additional payment, a "13th family allowance pay" regarding the family allowance (Familienbeihilfe) €180 per child.

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A one-off payment of €300 is set aside for unemployed people and other "vulnerable groups".

The payments will be made automatically by the Austrian government and responsible departments.

And higher allowances

Additionally, tax allowances will increase, especially the "Family Bonus Plus" deduction. While it is currently set at €1,500 per child per year, it should rise to €2,000.


Pensioners' tax allowance is also increasing, at least for low to medium-sized pensions, by €500 already in the summer. Austria's Senior Citizens' Association celebrated the measure.

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"The increase in pensioner tax deduction amounts by up to €500 is accurate, quick to implement and fair", said Ingrid Korosec, head of the association.

The payments and deductions will be automatically adjusted for inflation in the future.

End of the "cold progression"

Austria will also abolish the so-called "cold progression", the term used to describe increases in tax burdens which are based on increases in income but do not account for inflation.

In Austria, tax brackets were not adjusted for inflation, meaning that salary increases due to the rising cost of living could bump people up to higher brackets with higher taxes, effectively negating the impact of any actual salary increases.


The details of the measure will be discussed and decided by the National Council over the summer, and changes will be brought in 2023.

Help for entrepreneurs and businesses

The inflation package will also benefit businesses in Austria, with a specific payment for those industries particularly reliant on energy and electricity.

Additionally, the government said it would reduce non-wage labour costs, including labour taxes and contributions that won't affect salaries.

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The announcement was welcomed by several industry representatives, including the Austrian Hotel Association (ÖHV).

"It is a pleasant surprise that the cold progression is finally being attacked, and there is room for targeted measures", said Walter Veit, president of the ÖHV.

The federal government said that they would change deduction amounts in the future but that further details of a complex tax change would be decided only in Autumn.

Editor's note: This story was updated on November 23rd to fix a mistake regarding the family allowance payouts. The correct information is that a one-off family allowance (Familienbeihilfe) payment of €180 per child would be made. 


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