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According to the EU consolidation path, more than 6.3 billion euros will be saved this year and 8.7 billion next year. This is to be achieved, for example, by abolishing the climate bonus and educational leave, cutting subsidies, and making savings for ministries. On the revenue side, the government program includes a bank levy and higher federal fees. There will be no millionaire or inheritance taxes.
Climate bonus to be abolished, reorganization of educational leave
The climate bonus, introduced in 2022 to compensate for the CO2 tax, will be abolished without replacement. According to experts, the measure is considered to be the biggest chunk; it could save almost two billion euros this year. According to the government program, commuters will receive at least partial compensation in the form of a deduction from 2026. Educational leave will also be abolished, but a more limited successor regulation from 2026 will exist.
Bank levy and excess profits tax to rise
The SPÖ’s demand for a bank levy was one of the reasons for the failure of the first three-party coalition negotiations. Now there will be an increase in the stability tax for domestic banks. According to the government’s program, the bank levy is set to contribute around EUR 500 million to the budget in 2025 and 2026, and around EUR 200 million in the following years. However, there are no plans for a millionaires’ tax or inheritance tax, one of the core demands of the SPÖ.
Variable third of cold progression to be suspended
The distribution of the so-called “variable third” of cold progression will be suspended. The automatic adjustment of the tax brackets to compensate for the remaining two thirds of the creeping tax increase in the area of wage and income tax will remain in place. The top tax rate of 55% on income of one million euros or more, which will expire in 2025, will be extended for four years. There are tax increases for foundations, real estate transfer tax for large real estate transactions, and profits from reclassifications. The VAT exemption for PV systems will be abolished, and motor-related insurance taxes will also have to be paid for e-cars. Tobacco tax will be increased and extended to alternative products. In gambling, the gambling levy and betting fee will be increased.
Tax relief for companies and the self-employed
The three-party coalition also wants tax relief – especially for companies and the self-employed. The profit allowance and the introductory flat rate for tradespeople and freelancers are to be increased, as is the limit for the tax depreciation of company cars. Small trucks are to be exempt from the NoVA. For employees, tax breaks are planned for overtime and bonuses, as well as for Christmas and vacation pay, and a tax-free employee bonus is to be introduced.
Tax relief for women is to be provided by the VAT exemption for hygiene articles and related products (tampon tax) from 2026; contraceptives will also be exempt from VAT.
Reduction in non-wage labor costs depending on the economy
The reduction in non-wage labor costs, which the ÖVP and NEOS have long been calling for, is to be implemented by the middle of the government term, albeit depending on economic and budgetary developments. Specifically, the contributions to the Family Burdens Equalization Fund (FLAF) are to be reduced and the benefits are to be paid from the budget instead.
Federal fees increase significantly
Federal fees, which have not been increased since 2011, are to be valorized subsequently. Fees for administrative procedures such as the issuing of passports, driving licenses, and vehicle registrations are set to rise by around 44%.
A subsidy task force will evaluate subsidies in terms of their impact and effectiveness. Newly approved federal subsidies will be introduced for a limited period of time.
- source: oe24.at/picture: hp
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