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Summary
Austria uses a progressive income tax (Einkommensteuer) with seven brackets, ranging from 0% on income up to EUR 12,816 to 55% on income above EUR 1,000,000. Employees also pay mandatory social insurance contributions (Sozialversicherung) at a combined rate of 18.07% of gross salary up to a cap of EUR 77,400/year. Two key credits — the Verkehrsabsetzbetrag (commuter tax credit) and the Arbeitnehmerabsetzbetrag (employee deduction) — reduce the final tax bill. Austria’s unique “13th and 14th month” bonus payments (Sonderzahlungen) receive preferential flat-rate taxation at 6%.
How it works
Austrian take-home pay is calculated as:
- Social insurance (Sozialversicherung) — 18.07% of gross up to the contribution ceiling, deducted from gross salary
- Income tax (Lohnsteuer) — progressive rates applied to taxable income (gross minus social insurance and the Werbungskostenpauschale)
- Tax credits — Verkehrsabsetzbetrag, Arbeitnehmerabsetzbetrag, and others reduce the tax payable
- Sonderzahlungen — the 13th/14th month payments are taxed at a flat 6% (after a EUR 620 exemption), rather than at the progressive rate
Income Tax Brackets (2025)
| Taxable income | Tax rate |
|---|---|
| EUR 0 — EUR 12,816 | 0% |
| EUR 12,817 — EUR 21,152 | 20% |
| EUR 21,153 — EUR 35,259 | 30% |
| EUR 35,260 — EUR 68,727 | 40% |
| EUR 68,728 — EUR 103,213 | 48% |
| EUR 103,214 — EUR 1,000,000 | 50% |
| Above EUR 1,000,000 | 55% |
Each rate applies only to income within that band.
Social Security Contributions (Employee Share, 2025)
| Component | Rate | Annual cap |
|---|---|---|
| Pension insurance (Pensionsversicherung) | 10.25% | EUR 77,400 |
| Health insurance (Krankenversicherung) | 3.87% | EUR 77,400 |
| Unemployment insurance (Arbeitslosenversicherung) | 3.00% | EUR 77,400 |
| Housing subsidy (Wohnbaufoerderung) | 0.50% | EUR 77,400 |
| Chamber of labour (Arbeiterkammerumlage) | 0.50% | EUR 77,400 |
| Total employee share | 18.12% | EUR 77,400 |
Note: The core SV rate used in most simplified calculations is 18.07% (excluding the 0.50% Arbeiterkammerumlage which varies slightly). The contribution ceiling (Hoechstbeitragsgrundlage) is EUR 6,450/month or EUR 77,400/year for 2025.
Tax Credits (2025)
| Credit | Amount |
|---|---|
| Verkehrsabsetzbetrag (commuter credit) | EUR 487/year |
| Arbeitnehmerabsetzbetrag (employee credit) | included in Verkehrsabsetzbetrag |
| Zuschlag zum Verkehrsabsetzbetrag (low-income supplement) | Up to EUR 752 (phases out above EUR 18,499) |
| Alleinverdiener-/Alleinerzieherabsetzbetrag (sole earner/parent) | EUR 572+ (depending on children) |
| Familienbonus Plus (per child) | EUR 2,000/year (<18) or EUR 700/year (18+) |
The Verkehrsabsetzbetrag is automatically applied for all employees. The low-income supplement (Zuschlag) provides additional relief for those earning below approximately EUR 18,500.
Sonderzahlungen (13th and 14th Month)
Austrian employees typically receive two extra monthly payments per year (Urlaubsgeld and Weihnachtsgeld). These are taxed preferentially:
- First EUR 620: tax-free
- Remainder up to the annual sixth: flat 6% rate
- Social insurance contributions still apply at the standard rate
This preferential treatment significantly reduces the effective tax rate for Austrian employees compared to the headline bracket rates.
Worked Example
For a gross salary of EUR 40,000 (single, no children, 14 monthly payments):
- Social insurance:
- EUR 40,000 x 18.07% = EUR 7,228
- (This is within the EUR 77,400 cap)
- Taxable income for regular pay:
- Annual gross for 12 months: EUR 40,000 x 12/14 = EUR 34,286
- Minus SV on regular pay: EUR 34,286 x 18.07% = EUR 6,198
- Minus Werbungskostenpauschale: EUR 132
- Taxable income: EUR 34,286 - EUR 6,198 - EUR 132 = EUR 27,956
- Income tax on regular pay:
- EUR 0 — EUR 12,816 at 0% = EUR 0
- EUR 12,817 — EUR 21,152 at 20% = EUR 1,667
- EUR 21,153 — EUR 27,956 at 30% = EUR 2,041
- Gross tax: EUR 3,708
- Minus Verkehrsabsetzbetrag: EUR 487
- Net income tax on regular pay: EUR 3,221
- Tax on Sonderzahlungen (13th + 14th month):
- Sonderzahlungen gross: EUR 40,000 x 2/14 = EUR 5,714
- Minus SV: EUR 5,714 x 18.07% = EUR 1,033
- Minus EUR 620 exemption: EUR 5,714 - EUR 1,033 - EUR 620 = EUR 4,061
- Tax at 6%: EUR 4,061 x 6% = EUR 244
- Total deductions: EUR 7,228 (SV) + EUR 3,221 (income tax) + EUR 244 (Sonderzahlungen tax) = EUR 10,693
- Take-home pay: EUR 40,000 - EUR 10,693 = ~EUR 29,307/year (~EUR 2,442/month)
Assumptions and Limitations
- 2025 rates only — uses brackets, credits, and contribution ceilings for the 2025 calendar year
- Employment income only — salaried workers (unselbstaendig Erwerbstaetige). Does not model self-employment or freelance income
- Single, no children — does not apply Alleinverdienerabsetzbetrag or Familienbonus Plus
- 14 monthly payments — assumes the standard Austrian pay structure with 13th and 14th month Sonderzahlungen
- Standard deductions — applies only the Werbungskostenpauschale (EUR 132) and Verkehrsabsetzbetrag (EUR 487). Does not model Pendlerpauschale (commuter allowance), Sonderausgaben, or other individual deductions
- No church tax — Austria’s church contribution tax (Kirchenbeitrag) of up to 1.1% of income is not included (it is paid directly to the church, not via payroll)
- Contribution ceiling — social insurance is capped at EUR 77,400/year (EUR 6,450/month). Income above this ceiling incurs no additional SV contributions