0
0
Austria’s governing coalition has reached an internal agreement to raise the tax‑free allowance for overtime bonuses starting in 2026. The decision follows weeks of negotiation within the ÖVP–SPÖ–NEOS coalition and comes as part of a broader effort to ease the tax burden on employees.
Higher Tax‑Free Limit for Overtime
Beginning next year, up to 15 overtime bonuses per month—amounting to a maximum of €170—will be exempt from income tax. The previously planned limit for 2026 had been €120 for up to 10 overtime hours.
The adjustment builds on earlier reforms linked to the abolition of “cold progression” in 2023, which expanded tax benefits for overtime work. For 2024 and 2025, the government had temporarily raised the tax‑free ceiling from €86 to €200 for up to 18 overtime hours. That temporary increase expires at the end of 2025, prompting calls—particularly from ÖVP Economic Minister Wolfgang Hattmannsdorfer—to maintain a higher threshold.
Clarification on Sunday and Holiday Pay
In addition to the overtime changes, the coalition plans to legally re‑establish the tax‑free status of Sunday and public holiday pay. A ruling by the Federal Fiscal Court had previously overturned this exemption, creating uncertainty for employers and employees.
The government intends to introduce a legislative amendment during a special National Council session on Tuesday. The measure is expected to be passed in January and applied retroactively from the start of the year. Hattmannsdorfer emphasized that it is “absolutely right that those who work on holidays receive their entitled pay tax‑free.”
Broad Support — and Criticism from the Greens
Coalition representatives welcomed the agreement, framing it as a boost for workers and the economy. ÖVP parliamentary leader August Wöginger argued that every additional hour of work strengthens economic recovery and requires proper incentives. SPÖ social affairs spokesperson Josef Muchitsch called the compromise “a very good solution for employees.” In contrast, NEOS economic spokesperson Markus Hofer highlighted the importance of ensuring that full‑time work and additional hours “truly pay off.”
Support also came from major labor and business organizations.
- ÖGB praised the relief for those who work when others are off.
- Arbeiterkammer Wien welcomed the legal clarity on holiday pay.
- WKÖ’s tourism branch expressed satisfaction with the agreement, noting its relevance for sectors with high weekend and holiday workloads.
- source: Hector Pascua/picture: pixabay.com
This post has already been read 3 times!
