Income Tax in Austria

What Are the Austrian Income Tax Brackets and Rates?

Austrian income tax is calculated progressively. You do not pay the top rate on your entire income. Only the portion that falls within each bracket is taxed at that bracket's rate. Here is the breakdown:

For example, if you earn 50,000 EUR annually, you would pay 0% on the first 12,816 EUR, 20% on the next 8,002 EUR, 30% on the next 13,695 EUR, and 40% on the remaining 15,487 EUR. Your total tax bill would be approximately 11,886 EUR, giving you an effective tax rate of about 23.8%.

How Is the 13th and 14th Month Salary Taxed in Austria?

One of the most attractive features of the Austrian tax system for employees is the preferential treatment of the 13th and 14th monthly salaries (Urlaubsgeld and Weihnachtsgeld). These bonus payments are taxed at a flat rate of only 6% (after a tax-free allowance of 620 EUR), rather than at your marginal income tax rate. This can significantly reduce your overall tax burden compared to a system where all income is taxed at the standard progressive rates. This is one reason why the cost of living in Austria can feel more manageable than the headline tax rates suggest.

What Deductions and Allowances Can You Claim in Austria?

Austria offers several deductions and tax credits that can lower your tax liability. Some of the most relevant for expats include:

• Verkehrsabsetzbetrag (Commuter tax credit): 463 EUR per year, automatically applied for all employees.
• Pendlerpauschale (Commuter allowance): Additional deduction if your workplace is far from your home or not reachable by public transport.
• Sonderausgaben (Special expenses): Includes church tax (Kirchensteuer), donations to registered charities, and certain insurance premiums.
• Werbungskosten (Work-related expenses): Costs directly related to your employment, such as professional development, work tools, and home office expenses.
• Alleinverdiener-/Alleinerzieherabsetzbetrag (Sole earner/single parent credit): A tax credit for families where only one partner earns income, or for single parents.
• Familienbonus Plus: A tax credit of up to 2,000 EUR per child per year (166.68 EUR/month) for children under 18.

How Do You File Your Tax Return in Austria (Arbeitnehmerveranlagung)?

If you are an employee in Austria, your employer handles monthly tax withholding (separate from VAT, which applies to goods and services). However, you may be entitled to a tax refund by filing an Arbeitnehmerveranlagung (employee tax assessment). This is voluntary for most employees, but highly recommended. Many expats receive refunds of several hundred euros.

You can file your tax return online through FinanzOnline, the Austrian tax authority's online portal. You will need a FinanzOnline account, which can be activated with your tax number, a code from your local Finanzamt, or through ID Austria (the Austrian digital identity system). You will also need an Austrian bank account to receive any refund.

You have up to five years to file a voluntary return. For example, you can still file your 2020 return in 2025. If you are required to file (for example, because you had multiple employers in one year, held a freelance visa with side income, or received certain other income), the deadline is typically June 30 of the following year, or September 30 if filing electronically. For more details, see the Federal Ministry of Finance (BMF) website.

What Are the Best Tax Tools and Advisors for Expats in Austria?