Austrian Families Face Financial Squeeze as Family Benefits Changes Take Effect From 2027

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Austrian families will have to adjust to reduced financial support from 2027 after the government approved measures in its 2027-2028 double budget that will affect household finances. While some benefits are not being directly cut, the continued suspension of inflation adjustments means their real value will continue to decline as living costs rise.

One of the most significant changes concerns key family benefits, including family allowance and childcare benefits. According to financial portal Finanz.at, neither payment will be indexed to inflation in 2028, marking the third consecutive year without an adjustment.

Although families will continue to receive the same nominal amounts, rising consumer prices mean the payments will lose purchasing power over time. The measure affects families across Austria.

Another change will impact the Family Bonus Plus tax credit. For children up to the age of four, one parent will still be able to claim the full annual bonus of up to €2,000.

After a child’s fourth birthday, however, part of the bonus will be reserved for the second parent, provided both parents are eligible. As a result, one parent will no longer be able to claim the entire amount alone. Single parents will be exempt from the new rule.

Families who currently receive the Family Bonus Plus through monthly payroll deductions could notice the change from January 1, 2027. Those who claim the benefit later through their annual tax assessment are expected to see the impact at a later stage.

Further changes are also planned for Austria’s Family Burdens Equalisation Fund (FLAF), which finances payments such as family allowance, childcare benefits, school textbooks and subsidised student transport.

As part of a planned reduction in non-wage labour costs, revenues flowing into the fund are expected to decrease from around €7 billion to approximately €5 billion, according to Finanz.at. How the resulting shortfall will be fully compensated remains unclear.

The government’s measures highlight growing pressure on Austria’s public finances, while raising concerns among families that stagnant benefits and structural changes could leave them with less purchasing power in the years ahead.