This will result in a large increase in most tariff levels, relief for small businesses and higher tax breaks.
Allies will soon agree on a “variable third” share of tax revenue generated by ending cold progress. Negotiators said a solution for 2025 would be sought before the summer break. Before the election campaign, the problem should be resolved. The result will be a big increase in most tariff levels, relief for small businesses and more tax breaks.
The cold advance, known as a gradual tax increase, was repealed in 2023 in the area of payroll and income taxes. Since then, tax brackets have been adjusted each year to reflect inflation so that taxpayers don’t slip into a higher tax bracket as a result of annual wage increases. However, only two-thirds of the tariff levels are automatically adjusted. The government must agree on how the remaining additional revenue will be distributed. In the previous year, the variable third was primarily low- and middle-income.
Congratulations have already been given over the weekend. Finance Minister Magnus Brunner (ÖVP) primarily wanted to reduce the burden on “high performers” and families, while Social Affairs Minister Johannes Rauch (Greens) primarily wanted to support low-income families. AK and ÖGB, in turn, supported the use of free funds for drivers.
Overall, taxpayers would have to save about two billion euros by eliminating cold progress in 2025 – the “variable third” is therefore about 650 million euros. According to reports, these funds will, on the one hand, go towards further increases in individual payment levels (except for the 55 percent top rate). Tariff levels are where a specific tax rate applies. If they are higher, fewer people will have to pay a higher tax rate. According to the negotiators’ ideas, tariff levels could increase by four percent in the coming year – if increased “only” by automatic adjustments, this would be less.
The ÖVP can take the blame for this large increase as it applies to almost all pay levels (and even higher ones). It is also planned to increase the so-called small business threshold to 55,000 euros (currently 35,000 euros). This threshold determines whether you are still considered a small business owner or subject to regular taxation. On the other hand, the Greens, who advocated a social element in distribution, could demand a large increase in tax deductions, raising them even more like the level of payments, by fully adjusting them for inflation – ie. Automatic two-by-third adjustment. Low income people will benefit from this. (APA)
