How much money could tax changes save workers in Austria next year?
At the start of this year, Austria's tax reform came into force, leaving taxpayers with more income leftover each month. Here's how the reform could save you money next year.
From January 1st this year, several changes under Austria's tax reform came into place, including some tax cuts and the reduction of cold progression - a tax term used to describe an increased tax burden.
Under the reform, two thirds of the revenue from this creeping tax increase automatically goes to taxpayers. The remaining third can be distributed by the governing parties according to their political priorities. This means that the actual burden of cold progression is not fully compensated for everyone.
But the reform has left taxpayers in Austria with more net income per month.
READ ALSO: Tax cuts and bonus payments - Austria's financial measures that will benefit people this year
What does this mean for next year?
It has recently emerged how much the reform will bring taxpayers in 2024.
Cold progression essentially comes about when wage increases, leading to people paying more tax, are eaten up by inflation.
This phenomenon is being largely prevented in Austria by adjusting the tax brackets to inflation. According to the law, the decisive factor is the inflation rate from July 2022 to June 2023. Next year, the adjustment will be just under 10 percent due to the continuing high inflation over the last year.
READ ALSO: Cost of living: When will prices in Austria go down?
Think tank Agenda Austria calculated how the tax changes on battling cold progression would benefit taxpayers next year.
It found that those who earn €1,500 gross per month will save €182 in tax in 2024 according to the current model. For full compensation from inflation, however, a saving of €270 would be necessary.
Meanwhile, if you earn €3,000 per month in Austria, you will save at least €309, although the cold progression will actually cost you €463 in total.
"This basically shows two things: how important the abolition of the cold progression was and how unnecessarily complicated the current model is," said Dénes Kucsera from the think tank. According to Kucsera, cold progression in Austria should be completely abolished according to the Swiss model and distributed equally among all taxpayers.
If you're looking to find out how much tax you will save according to your current salary in 2024, Der Standard has published a handy widget where you can enter your gross income and see how much less tax you'll likely pay.
Check it out by visiting the site here and scrolling down the page until it says: 'Mit dieser Steuerersparnis können Sie rechnen' (You can count on these tax savings). It then asks you to submit 'Ihr monatliches Bruttoeinkommen' (your monthly gross income). You'll see the projected saving pop up underneath.
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From January 1st this year, several changes under Austria's tax reform came into place, including some tax cuts and the reduction of cold progression - a tax term used to describe an increased tax burden.
Under the reform, two thirds of the revenue from this creeping tax increase automatically goes to taxpayers. The remaining third can be distributed by the governing parties according to their political priorities. This means that the actual burden of cold progression is not fully compensated for everyone.
But the reform has left taxpayers in Austria with more net income per month.
READ ALSO: Tax cuts and bonus payments - Austria's financial measures that will benefit people this year
What does this mean for next year?
It has recently emerged how much the reform will bring taxpayers in 2024.
Cold progression essentially comes about when wage increases, leading to people paying more tax, are eaten up by inflation.
This phenomenon is being largely prevented in Austria by adjusting the tax brackets to inflation. According to the law, the decisive factor is the inflation rate from July 2022 to June 2023. Next year, the adjustment will be just under 10 percent due to the continuing high inflation over the last year.
READ ALSO: Cost of living: When will prices in Austria go down?
Think tank Agenda Austria calculated how the tax changes on battling cold progression would benefit taxpayers next year.
It found that those who earn €1,500 gross per month will save €182 in tax in 2024 according to the current model. For full compensation from inflation, however, a saving of €270 would be necessary.
Meanwhile, if you earn €3,000 per month in Austria, you will save at least €309, although the cold progression will actually cost you €463 in total.
"This basically shows two things: how important the abolition of the cold progression was and how unnecessarily complicated the current model is," said Dénes Kucsera from the think tank. According to Kucsera, cold progression in Austria should be completely abolished according to the Swiss model and distributed equally among all taxpayers.
If you're looking to find out how much tax you will save according to your current salary in 2024, Der Standard has published a handy widget where you can enter your gross income and see how much less tax you'll likely pay.
Check it out by visiting the site here and scrolling down the page until it says: 'Mit dieser Steuerersparnis können Sie rechnen' (You can count on these tax savings). It then asks you to submit 'Ihr monatliches Bruttoeinkommen' (your monthly gross income). You'll see the projected saving pop up underneath.
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