Cold Progression Soon to Be (Mostly) Austrian History

Sept 30, 2022 Benn-Ibler Rechtsanwälte

The draft of an Austrian Government bill to abolish cold progression (which is the Austrian tax term for bracket creep) is now on the table. Tax brackets and deductibles are to be automatically adjusted annually — mostly.

New 2023 tax brackets

For 2023, lawmakers have “manually” set inflation adjustments for individual tax brackets. The following rates for taxable income brackets will apply:

• 0% for the first EUR 11,693
• 20% between EUR 11,693 and EUR 19,134
• 30% between EUR 19,134 and EUR 32,075
• 42% between EUR 32,075 and EUR 62,080
• 48% between EUR 62,080 and EUR 93,120
• 50% above EUR 93,120

The top tax rate of 55% for incomes above EUR 1 million remains unchanged.  

Tax deductions are also adjusted.

Automatic inflation adjustments

From 2024 onwards, tax bracket and deductions adjustments will be implemented by a fixed schedule. This will be done by adjusting brackets and deduction rates to the extent of two-thirds of the positive inflation rate. This will be implemented by the Federal Minister of Finance by decree.

Legislators plan to preserve the remaining third as leeway, primarily in order to provide greater tax relief to lower incomes. Here, it is intended that relief measures for lower income earners will be determined based on an annual progression report.

Tax exemption for car sharing

In addition, up to EUR 200 of benefit allowances provided by employers for personal vehicle use as part of company-car-sharing are tax-exempt, provided that the allowance is only used for emission-free vehicles and the allowance is paid directly to the car-sharing provider or in the form of a bonus.

Government Bill, 1162 d.B. - XXVII GP