Austria Income Tax 2026: Rates, Brackets & How to File
How much tax will you pay in Austria in 2026? See the 6 progressive brackets (0–55%), social security rates, deductions, and filing deadlines. Updated for 2026 inflation adjustments.
Tax Residency and Progressive Rates
Determining Tax Residency
Tax residents are subject to worldwide income taxation. Residency determined by permanent home, center of vital interests, or habitual abode in Austria. Non-residents taxed only on Austrian-source income with fictitious €10,888 income addition (€10,486 if foreign income also taxed). Double taxation agreements with 65+ countries prevent double taxation for expats.
Permanent home in Austria - automatic residency
Center of vital interests triggers residency
Habitual abode creates residency status
Residents: worldwide income taxation principle
Non-residents: Austrian-source income only + fictitious increase
Income Tax Rates 2026 (Inflation-Adjusted 1.73%)
| Income Bracket (Annual) | Tax Rate | Effective Calculation |
|---|---|---|
| €0 - €13,539 | 0% | Tax-free threshold (increased from €13,308 in 2025) |
| €13,539 - €21,992 | 20% | 20% on income above €13,539 |
| €21,992 - €36,458 | 30% | 30% on income above €21,992 (reduced from 35%) |
| €36,458 - €70,365 | 40% | 40% on income above €36,458 (reduced from 42%) |
| €70,365 - €104,859 | 48% | 48% on income above €70,365 |
| €104,859 - €1,000,000 | 50% | 50% on income above €104,859 |
| Above €1,000,000 | 55% | 55% top rate on income exceeding €1 million |
Brackets automatically adjusted annually by 2/3 of inflation rate to prevent fiscal drag. Second rate reduced from 35% to 30% (2022-2023), third rate from 42% to 40% (2023-2024) as part of eco-social tax reform.
Tax-Free Threshold 2026
Up from €13,308 (1.73% inflation adjustment)
Key Tax Deductions and Allowances
Employee Standard Deduction (Werbungskostenpauschale)
€132 annually automatically applied to employment income. Can be increased with documentation of actual business expenses exceeding this amount. Includes costs for professional development, work equipment, specialized literature, and home office expenses.
Single Earner Allowance (Alleinverdienerabsetzbetrag)
€601 annually for sole household earner with at least one child. Additional amounts for second and subsequent children. Increases with number of dependents. Significant tax relief for single-income families with children. Inflation-indexed.
Family Bonus Plus (Familienbonus Plus)
€2,000 per year per child under 18 (€166.68 monthly). €58.34 monthly for children 18+. Direct tax credit reducing calculated tax liability. Can be split between parents or claimed by one. Indexed for children living outside Austria per EU Court ruling.
Commuter Deduction (Pendlerpauschale)
Every employee gets the €496 transport tax credit (Verkehrsabsetzbetrag); commuters add distance-based amounts for the work commute. Increased for 2026 due to rising transport costs. Small commuter allowance for distances where public transport usable; large allowance where not. Inflation-adjusted annually.
Social Security Contributions
Employee and Employer Contribution Rates
Total social security rate ~39%. Employee contributions deducted from gross: 10.25% pension, 3.87% health, 2.95% unemployment, plus minor contributions (housing subsidy, chamber of labor). Employer contributions on top of gross: 12.55% pension, 3.78% health, 2.95% unemployment, 1.1% accident insurance. Maximum assessment base €6,930 monthly for regular payments. Special payments (13th/14th salaries) receive favorable rates: employee 17.07%, employer 20.48%, on maximum €13,860 annually.
Detailed Social Security Breakdown 2026
| Contribution Type | Employee Rate | Employer Rate | Total |
|---|---|---|---|
| Pension Insurance | 10.25% | 12.55% | 22.80% |
| Health Insurance | 3.87% | 3.78% | 7.65% |
| Unemployment Insurance | 2.95% | 2.95% | 5.90% |
| Accident Insurance | 0% | 1.10% | 1.10% |
| Housing Subsidy & Other | ~1% | ~0.6% | ~1.6% |
| Total Regular Payments | ~18.07% | ~20.98% | ~39.05% |
Maximum monthly assessment base €6,930 for regular payments. Special payments (13th/14th salaries) have reduced rates and €13,860 annual cap.
Capital Income and Investment Taxation
Flat 27.5% Rate on Investment Income
Capital income taxed separately from employment income at flat 27.5% rate. Includes dividends, interest, capital gains from securities. Real estate capital gains: 30% for properties acquired after March 31, 2002; effectively 4.2% or 18% of sale proceeds for older properties. Ten-year holding exemption abolished since April 2012. Rental income included in progressive income tax after deductions.
Dividends and interest: 27.5% flat rate
Stock capital gains: 27.5% flat rate
Real estate (post-2002): 30% on profits
Real estate (pre-2002): 4.2% or 18% of proceeds depending on reclassification
Rental income: progressive rates with expense deductions
Special Payments - 13th and 14th Salaries
Favorable Tax Treatment for Holiday and Christmas Bonuses
Austria provides special tax treatment for 13th month (holiday) and 14th month (Christmas) salary payments. First €620 per year completely tax-exempt. The next ~€24,400 is taxed at a flat 6%, with 27% and 35.75% only on very large bonuses (separately from the regular scale). Social security contributions also reduced: employee 17.07%, employer 20.48% (versus regular 18.07%/20.98%). Maximum assessment base €13,860 annually.
First €620 of special payments per year tax-free
Remaining amount: flat 6% (27%/35.75% on very large bonuses)
Reduced social contributions: employee 17.07%
Employer contributions: 20.48% (vs regular 20.98%)
Maximum base €13,860 annually for special payments
Additional Tax Deductions
Pensioner, Single-Parent, and Special Expense Deductions
Pensioner deduction (Pensionistenabsetzbetrag): €1,002-€1,476 depending on income, increased for 2026. Single-parent allowance: €601 plus €212 for second child. Special expenses (Sonderausgaben): medical costs, education expenses, charitable donations up to 10% of income, church tax. Extraordinary burdens (außergewöhnliche Belastungen) deductible when exceeding self-retention threshold.
Pensioner deduction: €1,002-€1,476 (income-dependent, raised 2026)
Single-parent: €601 + €212 for second child
Charitable donations: up to 10% of income deductible
Medical expenses: extraordinary burden rules apply
Church tax: fully deductible as special expense
Tax Filing and Compliance
Annual Tax Return Requirements
Employees with only employment income not required to file if wage tax fully withheld. Voluntary filing possible for refund of business expenses or special expenses. Self-employed must file annual returns. Deadline: April 30 for paper filings, June 30 for electronic submissions via FinanzOnline. Extended deadline if filed through tax advisor. Monthly wage tax (Lohnsteuer) withheld by employers for employees and pensioners.
Employees: no filing required if only wage income
Voluntary filing for expense refunds available
Self-employed: mandatory annual returns
Deadline: April 30 (paper) or June 30 (online)
File via FinanzOnline system for electronic submission
Tax Treatment for Expats
Double Taxation Agreements and Exemptions
Austria has double taxation agreements with 65+ countries including all EU/EEA members, USA, and major economies. Foreign income exempt from Austrian taxation but increases tax rate applied to Austrian income (progression reservation). Tax credit available for foreign taxes paid. Cross-border workers from Germany, Italy, Liechtenstein have special provisions. US-Austria totalization agreement prevents double social security taxation.
65+ double taxation treaties in force
Foreign income: exempt but affects rate (progression)
Tax credit for foreign taxes paid available
Cross-border worker special rules (DE, IT, LI)
US-Austria totalization prevents double social tax
2026 Key Changes and Updates
Inflation Adjustment 1.73%
All tax brackets increased by 1.73% (two-thirds of 2.6% inflation) for 2026. Tax-free threshold rises to €13,539. All thresholds up to €1 million adjusted proportionally. Automatic indexation prevents fiscal drag.
Pensioner Deduction Increased
Pensionistenabsetzbetrag raised for 2026 as part of inflation compensation. Range €1,002-€1,476 depending on pension income level. Helps retirees maintain purchasing power.
Commuter Allowance Adjusted
€496 transport tax credit (Verkehrsabsetzbetrag) plus Pendlerpauschale distance additions increased to reflect rising transport costs. Both small and large commuter allowances inflation-indexed for 2026.
Tax-Free Employee Bonus €1,000
Special tax-free employee bonus up to €1,000 introduced for 2025 continuing into 2026. Employers can provide bonus without tax or social security contributions. Cost-of-living support measure.
VAT Exemptions from 2026
Value-added tax exemptions apply to contraceptives and female hygiene products starting January 2026. Standard VAT rate remains 20%, reduced rates 10% and 13% for certain goods.
Foundation Entry Tax Rate Rise
Foundation entry tax (Stiftungseingangssteuer) rate increases to 3.5% in 2026 from previous levels. Affects wealth transfer and estate planning structures using Austrian foundations.
Frequently Asked Questions
What is the income tax rate in Austria for 2026?
Austria has progressive tax rates from 0% to 55%. The tax-free threshold is €13,539 (increased 1.73% for inflation). Rates are: 0% up to €13,539; 20% from €13,539-€21,992; 30% from €21,992-€36,458; 40% from €36,458-€70,365; 48% from €70,365-€104,859; 50% from €104,859-€1,000,000; and 55% above €1 million.
How much are social security contributions in Austria?
Total social security contributions are approximately 39%: employees pay ~18.07% (10.25% pension, 3.87% health, 2.95% unemployment, plus minor contributions), employers pay ~21% (12.55% pension, 3.78% health, 2.95% unemployment, 1.1% accident). Maximum monthly assessment base is €6,930 for regular payments.
What is Einkommensteuer?
Einkommensteuer is the German term for income tax in Austria. It applies to all types of income: employment (Lohnsteuer for wage earners), self-employment, investments, property rental. Self-employed pay Einkommensteuer directly; employees pay via monthly wage tax (Lohnsteuer) withholding.
What is the tax-free threshold in Austria 2026?
The tax-free threshold (Grundfreibetrag) for 2026 is €13,539 annually, increased from €13,308 in 2025 through 1.73% inflation adjustment. Income below this amount is not taxed. This automatic indexation prevents fiscal drag (cold progression).
What are 13th and 14th salaries in Austria?
The 13th month salary (holiday bonus) and 14th month salary (Christmas bonus) are special payments in Austria. Tax treatment: first €620 per year is tax-free, the remainder is taxed at a flat 6% (27%/35.75% only on very large bonuses). Social contributions reduced to 17.07% employee, 20.48% employer. Maximum assessment base €13,860 annually.
What is Alleinverdienerabsetzbetrag?
Alleinverdienerabsetzbetrag is the single-earner tax credit for sole household earners with at least one child. Worth €601 annually plus additional amounts for second and subsequent children. Directly reduces calculated tax liability. Inflation-indexed annually.
What is Pendlerpauschale?
Pendlerpauschale is the commuter deduction for work travel expenses. Distance-based amounts on top of the €496 transport tax credit (Verkehrsabsetzbetrag) every employee receives. Small allowance for accessible public transport; large allowance where public transport unavailable or impractical. Increased for 2026 to reflect rising costs.
How do I file my Austrian tax return?
File online via FinanzOnline (finanzamt.gv.at) by June 30, or paper filing by April 30. Employees with only wage income don't need to file if tax fully withheld, but can file voluntarily for refunds. Self-employed must file annually. Extended deadlines available through tax advisors.
What is the capital gains tax rate in Austria?
Capital income taxed at flat 27.5% for most assets: dividends, interest, stock gains. Real estate acquired after March 31, 2002 taxed at 30%; properties acquired before that at an effective 4.2% or 18% of proceeds depending on reclassification. Ten-year holding exemption abolished since April 2012.
How are expats taxed in Austria?
Tax residents pay tax on worldwide income. Non-residents taxed on Austrian-source income plus fictitious €10,888 income increase. Austria has double taxation agreements with 65+ countries. Foreign income exempt but affects progression rate. Tax credits available for foreign taxes paid. US-Austria totalization prevents double social security taxation.
Calculate Your Austrian Income Tax
Estimate your Austrian tax including Einkommensteuer, social contributions, special payment taxation, and all deductions. See net income with 2026 inflation-adjusted rates.