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Crossing into a higher Austrian tax bracket doesn’t raise the tax on the income you already had. Only the euros above the threshold pay the higher rate, so under the tariff itself a pay rise always leaves more money after tax, not less.
The table is the easy part. What changes the actual bill is what sits around it: the tariff applies to taxable income rather than gross pay, the 13th and 14th salary are taxed separately, and credits come off the tax at full value.
ARTICLE SUMMARY
Austria taxes income in seven slices, from 0 % up to EUR 13,539 to 55 % above EUR 1,000,000. Each rate applies only to the income inside its own slice. The 13th and 14th salary sit outside this table, six of the seven thresholds rise with inflation most Januaries, and next year’s thresholds are already published.
The seven brackets and their rates
This tariff is federal. The same brackets and rates apply in all nine states, from Vorarlberg to Vienna.
| Taxable income | Rate on that slice |
|---|---|
| Up to EUR 13,539 | 0 % |
| Above that, up to EUR 21,992 | 20 % |
| Above that, up to EUR 36,458 | 30 % |
| Above that, up to EUR 70,365 | 40 % |
| Above that, up to EUR 104,859 | 48 % |
| Above that, up to EUR 1,000,000 | 50 % |
| Above EUR 1,000,000 | 55 % |
These are the thresholds for the 2026 tax year, as set out in the Finance Ministry’s page on the tax brackets on the business service portal (in German). Official sources call each band a Tarifstufe (tax bracket), and that’s the word on payslip explanations and FinanzOnline help pages.
The thresholds apply to taxable income, not gross salary. For an employee, that’s regular pay after social insurance contributions and any deductions, with the 13th and 14th salary taken out and taxed separately (more on that below).
A higher bracket only touches the top slice
Each rate applies only to the part of income that falls inside its band. Someone whose taxable income ends one euro above a threshold pays the higher rate on that one euro, and exactly what they paid before on everything underneath.
That produces two different rates worth keeping apart. The marginal rate is the rate on the next euro earned; it’s what matters for a pay rise, a bonus or a side income. The average rate is total tariff tax divided by taxable income, and it’s always lower, because every euro below the top slice was taxed at a lower rate on its way there.
Austria’s tariff moves in fixed steps rather than a smooth curve. So the marginal rate stays flat across a whole band and then jumps at the threshold, while the average rate climbs gently the whole way up.
Deductions and credits come off at different points
A deduction and a tax credit of the same size are worth very different amounts, because they enter the calculation at different stages.
| Type | What it comes off | What it’s worth |
|---|---|---|
| Deduction, such as Werbungskosten (work-related expenses) | Taxable income, before the tariff runs | The amount times the marginal rate on the top slice |
| Absetzbetrag (tax credit) | The tax the tariff produces | The full amount, up to the tax owed |
The Finance Ministry’s overview of tax credits (in German) lists which credits exist, who gets them automatically through payroll and which have to be claimed. For some low earners, part of a credit is paid out even where no tax is owed.
ILLUSTRATION
Illustration: a hypothetical person with no dependants, employed full time on a standard contract with 14 salary payments a year, tax-resident in Styria for the whole of the 2026 tax year, not a US person and not employed by an international organisation. After social insurance and deductions, the regular part of their pay (excluding the 13th and 14th salary) leaves EUR 45,000 of income taxed on the tariff. The first EUR 13,539 is taxed at 0 %: EUR 0. The next EUR 8,453, up to EUR 21,992, is taxed at 20 %: EUR 1,690.60. The next EUR 14,466, up to EUR 36,458, is taxed at 30 %: EUR 4,339.80. The last EUR 8,542 is taxed at 40 %: EUR 3,416.80. Tariff tax before credits: EUR 9,447.20. That’s an average rate of about 21%, against a marginal rate of 40 %. If the same person had EUR 1,000 more in deductions, all of it would come off the top slice, cutting the tariff tax by EUR 400. A EUR 1,000 tax credit would cut it by EUR 1,000. Tax credits and the separate tax on the 13th and 14th salary aren’t included in the figures above.
Where the 13th and 14th salary fit
Most employees in Austria are paid 14 times a year: 12 monthly salaries plus Urlaubsgeld (holiday pay) and Weihnachtsgeld (Christmas pay). These two Sonderzahlungen (special payments) aren’t a statutory right: whether they’re paid, and how much, is set by the collective agreement or the employment contract. Either way, they never go through the brackets above.
Instead, up to a ceiling called the Jahressechstel (annual sixth, roughly one-sixth of the regular pay received in the year), they’re taxed at fixed rates. The first EUR 620 is tax-free, then 6 % applies to the next EUR 24,380, 27 % to the next EUR 25,000 and 35.75% to the next EUR 33,333. If the Jahressechstel comes to no more than EUR 2,615, none of it is taxed at all.
Anything above the Jahressechstel, or above EUR 83,333 a year, goes back onto the tariff at the normal rates, according to the income tax law’s rules on special payments (in German).
For a salaried employee, this split pulls the real marginal rate on a pay rise below the headline bracket rate, because one-seventh of the raise lands in the low-rate pot.
ILLUSTRATION
Illustration: a hypothetical person with the same assumptions as the first illustration (2026 tax year, Styria, 14 payments, top slice in the 40 % band), whose 13th and 14th salary each equal one regular monthly payment. Their special payments already sit above the tax-free amount and inside the 6 % tier. They get a raise worth EUR 100 per payment after social insurance, across all 14 payments. The 12 regular payments add EUR 1,200 of tariff income, all taxed at 40 %: EUR 480. The 2 special payments add EUR 200, taxed at 6 %: EUR 12. Tax on the EUR 1,400 raise: EUR 492, about 35%, below the headline marginal rate.
Why the thresholds move most years
Since the 2023 tax year, the thresholds of the first six brackets rise automatically each January to offset kalte Progression (bracket creep, where pay that only keeps pace with inflation drifts into higher bands). The rise is two-thirds of the average inflation rate measured from July of the previous year to June, and most tax credits go up by the same percentage.
For the 2026 tax year the measured rate was 2.6%, so the thresholds rose by two-thirds of that.
The law originally left the last third to the government, to hand back each year through targeted relief. The 2025 budget legislation suspended that third for the tax years 2026 to 2029, so only the automatic two-thirds applies until then. For a hypothetical employee whose pay rises exactly in line with inflation, that means a small share of each year’s creep stays with the state.
TIP.
The top bracket follows different rules. Its threshold of EUR 1,000,000 isn’t indexed, and its 55 % rate is temporary: it applies for the calendar years 2016 to 2029 only, according to the Finance Ministry’s page on the tax brackets. Under current law the rate on income above that threshold falls back to 50 % from the 2030 tax year unless parliament extends it.
Next year’s thresholds are already published
The Finance Ministry publishes each year’s indexed thresholds by regulation before the year starts. The 2027 inflation adjustment regulation (in German), published on 31 August 2026, applies a measured inflation rate of 3.4%, so the thresholds rise by two-thirds of that from 1 January 2027.
| Top of the band | 2026 | 2027 |
|---|---|---|
| 0 % band | EUR 13,539 | EUR 13,846 |
| 20 % band | EUR 21,992 | EUR 22,491 |
| 30 % band | EUR 36,458 | EUR 37,285 |
| 40 % band | EUR 70,365 | EUR 71,960 |
| 48 % band | EUR 104,859 | EUR 107,236 |
The rates don’t change, and neither does the EUR 1,000,000 threshold. For the hypothetical person in the first illustration, the same EUR 45,000 of tariff income would produce slightly less tax in 2027, because more of it falls into the lower bands.
The same tariff for employees and the self-employed
These brackets apply to Einkommensteuer (income tax) whatever the income comes from: a job, self-employment, a business or letting a flat. What differs is how the tax is collected.
Employers withhold Lohnsteuer (wage tax) from each payslip using this same tariff, so for someone with only one job the year often squares itself. The self-employed, and employees with significant other income, settle the year’s income tax through an annual return, where all their taxable income is added up and run through the table once.
Residency, international organisations and US persons
This tariff describes what an Austrian tax resident pays on worldwide income. Non-residents are taxed only on certain Austrian income, and some of the tariff mechanics work differently for them. Which group someone falls into depends on Austria’s residency tests: having a home here they can use, or staying for more than six months.
Residency for someone with a home in Austria and another country turns on the double taxation agreement between the two and on individual facts. The Finance Ministry keeps the list of Austria’s double taxation agreements (in German).
Staff of international organisations based in Vienna (the UN, IAEA, OPEC and others) often have their tax status set by a headquarters agreement rather than by this tariff. Their organisation’s HR or legal office is the place to confirm which rules apply.
US citizens and green card holders are taxed by the US on worldwide income wherever they live, so the Austrian tariff runs alongside a US return rather than replacing it. The US foreign tax credit exists to offset tax paid abroad, and the IRS explains it in Publication 514, Foreign Tax Credit for Individuals. How it applies to a particular return is a question for a US-qualified tax professional.
KEY TAKEAWAY
The tariff turns taxable income into tax, one slice at a time, and a higher bracket never reaches back into the slices below it. Between the table and the final assessment sit deductions, credits, the fixed-rate tax on the 13th and 14th salary and residency status.
For a quick estimate, the Finance Ministry’s own gross-to-net and income tax calculators are linked from the same page on the tax brackets. Where credits, a second income or a move during the year interact in one return, that’s regulated tax advice, and a licensed Steuerberater (tax adviser) is the route. The Chamber of Tax Advisers and Auditors (KSW) licenses the profession, and its member register (in German) can be filtered by location and by the type of authorisation each adviser holds.
Official sources
- Tax brackets (Tarifstufen), Finance Ministry on the business service portal (in German)
- Overview of tax credits, Finance Ministry (in German)
- Inflation adjustment regulation 2027, Finance Ministry (in German)
- Income tax law: rules on special payments, federal legal information system (in German)
- Austria’s double taxation agreements, Finance Ministry (in German)
- Publication 514, Foreign Tax Credit for Individuals, US Internal Revenue Service
