Similar to 2025, the income tax brackets, and a number of tax deductions will be adjusted to inflation.

From 2026:
For the tariff adjustment, the entry-level threshold (=“subsistence minimum“) has been increased by 1.73% to EUR 13,539 and the respective threshold amounts for the different tariff stages

• Stage 2 (20%): EUR 21,992
• Stage 3 (30%): EUR 36,458
• Stage 4 (40%): EUR 70,365
• Stage 5 (48%): EUR 104,859

have been raised.

Inflation adjustment/valorization

Single-earner and single-parent deduction, alimony deduction, child deduction, deduction for travel expenses, pensioners’ deductions.

Commuter allowance (Pendlerpauschale)

Travel costs for commuting are covered by the transportation allowance have increased in the year 2026 to EUR 496 (2025: EUR 487). The commuter euro has also increased from EUR 2 to EUR 6 per year per kilometer in 2026 of the one-way distance between home and the place of work.

Lump sum option (Basispauschalierung)

In 2026 the Turnover limit rises from EUR 320,000 to 420,000.
The lump sum for business expenses increases from 13.5% to 15%. The maximum deduction amount for business expenses is EUR 63,000.

Get the full overview of the income taxes in Austria.

Increased investment allowance (IFB)

With the increased investment allowance (IFB), investments made by companies in November and December 2025 and throughout 2026 will receive greater tax incentives. As before, the maximum benefit applies to costs of EUR 1 million, but the investment allowance has been increased from 10% or 15% to 20% or 22%.

The corporate income tax rate remains at 23% since 2024 (24% in calendar year 2023).

Read more about corporate income tax in Austria.

Increase in tax rates for private foundations

The foundation entry tax rate will be increased from 2.5% to 3.5% as of January 1, 2026, and interim taxation will be raised from 23% to 27.5% as of the 2026 assessment year.

Small business owners

The small business threshold will rise from EUR 35,000 (net) (in calendar years prior to 2025) to EUR 55,000 (gross) in annual turnover from the year 2025.

VAT concessions

From January 1st 2026, a genuine tax exemption (input tax deduction is granted) for contraceptives and feminine hygiene products comes into force.

Full overview of value-added tax in Austria.

• Starting 1 January 2026, partial retirement is possible.
• From January 1st 2026, allowances for up to 15 hours of overtime per month may be disbursed tax-free, up to a limit of EUR 170. In addition, work on Sundays as well as public holidays will remain tax-free, up to a limit of EUR 400 per month.
• From January 2026 there will be stricter measures regarding the additional income limit alongside unemployment benefits.
• On April 1st 2025, a change came into force whereby motor vehicles with CO2 emissions of 0g/km are also subject to engine-related insurance tax and are therefore no longer exempt from this tax.