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Income Tax in Austria 2026: Tax Brackets, Tax-Free Threshold and Allowances

Updated: 2026-10-26
Income Tax in Austria 2026: Tax Brackets, Tax-Free Threshold and Allowances

Austria’s income tax (Einkommensteuer) is progressive: the higher your annual income, the higher the rate applied to the upper part of that income. Since 2023, the tax bracket thresholds have been increased every year. This guide explains the 2026 and 2025 brackets, an example calculation and how tax allowances work.

In brief:

What is the income tax-free threshold in Austria?

Income tax is based on taxable income (steuerpflichtiges Einkommen) for a complete calendar year. The tax brackets (Tarifstufen) are then applied to this amount.

The rate does not apply to your entire income when you enter a higher bracket. It applies only to the part that falls within that bracket. The marginal tax rate (Grenzsteuersatz) shows how much tax is charged on each additional euro earned in a particular bracket.

What are the Austrian tax brackets in 2026 and 2025?

The 2026 brackets apply to income earned in 2026. For 2025 income, including a tax return for the 2025 year, the 2025 thresholds apply.

The 55 percent rate is temporary. It applies to the years from 2016 to 2029. After that, this bracket will also have a rate of 50 percent.

Why do the tax bracket thresholds change?

To offset cold progression (kalte Progression), the thresholds have been increased every year since 2023 by two-thirds of inflation. This means that if your salary rises only in line with inflation, you are less likely to move automatically into a higher tax bracket.

The tax-free portion has changed as follows:

The rate for the third bracket has also fallen. It was 42 percent in 2022, 41 percent in 2023 and has been 40 percent since 2024.

How is tax calculated on 40,000 euros of income?

For a self-employed person with taxable income of 40,000 euros in 2026, the calculation is:

The same income resulted in tax of 7,593.10 euros in 2025, 7,903.70 euros in 2024 and 8,619.75 euros in 2023. These figures represent the tax calculated under the tariff (Tarifsteuer). Any applicable allowances are deducted afterwards.

Which allowances can reduce income tax?

There are two main types of tax-reducing items:

Deductible amounts adjusted annually for inflation include the single-earner allowance (Alleinverdienerabsetzbetrag), single-parent allowance (Alleinerzieherabsetzbetrag), maintenance allowance (Unterhaltsabsetzbetrag), transport allowance (Verkehrsabsetzbetrag) and pensioner allowance (Pensionistenabsetzbetrag). The social security refund (SV-Rückerstattung) is also adjusted in this way.

For employees, the tax brackets and the deductible amounts that apply automatically together determine the actual tax-free basic income. Further allowances may increase this amount.

Where can you calculate Austrian income tax?

Employees can use a gross-to-net calculator (Brutto-Netto-Rechner), while self-employed people can use an income tax table (Einkommensteuertabelle). These provide guidance only. Legally, only a decision (Bescheid) issued by the competent tax office (Finanzamt) is valid.

The calculation can be more complicated in special cases, such as half-rate taxation (Hälftesteuersatz), temporary unemployment assistance or income from abroad.

Frequently asked questions

How much income is tax-free in Austria in 2026?

The first 13,539 euros of annual taxable income is not subject to income tax. In 2025, the threshold was 13,308 euros.

Do I pay a higher rate on all my income if I enter a higher bracket?

No. The higher rate applies only to the part of your income that falls within that bracket. The portions in the lower brackets continue to be taxed at their respective rates.

How long will the 55 percent tax rate remain in force?

The 55 percent rate applies to the part of annual income above 1 million euros through the 2029 tax year. After that, the rate will be 50 percent.

Is VAT part of income tax?

No. VAT is a separate type of tax. See the guide to Austrian VAT (Mehrwertsteuer) for more information.

Practical steps

  1. Work out your taxable income for the complete calendar year.
  2. Apply the tax brackets for the relevant year: use the 2026 thresholds for 2026 income and the 2025 thresholds for 2025 income.
  3. Calculate each part of your income separately; a higher rate applies only to the portion in the higher bracket.
  4. Subtract eligible special expenses, extraordinary burdens and deductible amounts (Absetzbeträge).
  5. Use a Brutto-Netto-Rechner or Einkommensteuertabelle for an estimate, but rely on the Finanzamt’s Bescheid as the legally valid result.

Note: This article is based on online sources and does not constitute advice. Use it at your own responsibility. For professional advice, contact a lawyer, legal professional, healthcare professional, employment-law or employment-services professional, or another relevant specialist.

Source: usp.gv.at

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