Learn › Income Tax (Austria)

In short: In Austria income is taxed progressively: a base amount (around 13,500 euros of annual income in 2026) is tax-free. Above that, tiered marginal rates of 20%, 30%, 40%, 48% and 50% apply; the top rate of 55% applies temporarily (through 2029) to income above 1 million euros. For employees the tax is withheld continuously from the salary as wage tax. (As of 2026; when in doubt, check the official sources.)

Income Tax Basics in Austria

Kontoo editorial team · Updated 06/24/2026

Income tax (Einkommensteuer) is Austria’s central tax on the income of individuals. It is progressive: the more you earn, the higher the percentage on each additional euro. For employees it is withheld directly from wages as wage tax (Lohnsteuer). This chapter explains the basics – it is not tax advice. (As of 2026; when in doubt, please check the official sources.)

Understand gross pay: social security contributions are deducted first from your gross salary – the employee share is around 18% (as of 2026).
Find the tax base: after deducting social security and any allowances or tax credits, you arrive at your taxable income.
Apply the bracket tariff: the progressive system taxes income in slices – the first roughly 13,500 euros are tax-free, above that marginal rates rise from 20% to 55%.
Wage tax and assessment: for employees the employer remits wage tax monthly; through the employee tax assessment in FinanzOnline you can reclaim any overpayment.

What matters

Austrian income tax follows a progressive bracket tariff. Income is split into slices, and each slice is taxed at its own marginal rate. For 2026 the following (rounded, annually inflation-adjusted) values apply: up to around 13,500 euros tax-free (0%), then up to around 22,000 euros at 20%, up to around 36,500 euros at 30%, up to around 70,000 euros at 40%, up to around 105,000 euros at 48%, up to 1 million euros at 50%, and above that 55% (the last one temporary through 2029). The key idea is the marginal versus average tax rate: if you earn one euro more and move into the next bracket, only that extra euro is taxed higher – not your whole income. Your effective average rate therefore stays well below your highest marginal rate. Before tax comes social security. For employees the employee share in 2026 is around 18% of gross pay (health, pension and unemployment insurance), capped by the maximum contribution base of 6,930 euros gross per month. Social security contributions reduce the tax base. The tax year is the calendar year. Everything is managed through the official FinanzOnline portal; the employee tax assessment lets you claim work-related expenses, special expenses and tax credits. (All figures as of 2026; when in doubt, check the official sources.)

ExampleExample (simplified, as of 2026): taxable annual income of 40,000 euros. Tax-free up to 13,539 euros = 0 euros. From 13,539 to 21,992 euros (8,453 euros) at 20% = 1,690.60 euros. From 21,992 to 36,458 euros (14,466 euros) at 30% = 4,339.80 euros. From 36,458 to 40,000 euros (3,542 euros) at 40% = 1,416.80 euros. Total income tax roughly 7,447 euros. That is an average tax rate of about 18.6% – even though the marginal rate is already 40%. (Tax credits such as the traffic tax credit are not included here and would lower the tax further.)

Use the Kontoo compound-interest calculator (/compound-interest-calculator) to model how part of your net income could grow over the years. Your official pay slip and the employee tax assessment are handled in the official FinanzOnline portal.

In depth

Bracket creep and inflation adjustment

Since 2023 the tax brackets and many tax credits are automatically adjusted for inflation each year to soften bracket creep (kalte Progression). For 2026 the thresholds (except the highest) were raised by about 1.7%. That is why the stated thresholds shift slightly upward every year.

Social security as a step before tax

Before wage tax is calculated, social security contributions (employee share around 18%, as of 2026) are taken from gross income and reduce the tax base. The maximum contribution base in 2026 is 6,930 euros gross per month; income above that is free of social security but still subject to income tax.

Checklist

Income tax is progressive: higher slices of income are taxed at higher rates.
Marginal rates apply per slice, not to the whole income – the average rate is lower.
Wage tax is the withheld form of income tax for employees.
FinanzOnline is the official portal for the employee tax assessment.

Common myths

Myth: If I move into the next tax bracket, a higher gross leaves me with less net.

Reality: False. The higher rate applies only to the income above the threshold. More gross always means more net – only the additional amount is taxed at the higher rate.

Myth: The 55% top rate also hits well-paid employees.

Reality: No. In 2026 the 55% rate applies only to income above 1 million euros per year and is also time-limited. The vast majority of earners reach at most the 40% or 48% bracket.

Frequently asked questions

At what income do I start paying income tax in Austria?

In 2026 annual income up to around 13,500 euros stays tax-free. Only the portion above that is taxed, starting at a 20% marginal rate. The exact tax-free base is adjusted for inflation each year (as of 2026).

What is the difference between wage tax and income tax?

Wage tax (Lohnsteuer) is not a separate tax – it is the form of income tax that employers withhold directly from wages and pay to the tax office. Self-employed people pay the same income tax, but via assessment with advance payments.

Does the 55% top rate mean half of my pay is taken?

No. Marginal rates apply only to the income within each slice, not to your whole income. Your average tax rate is therefore well below your top marginal rate. 55% only affects income above 1 million euros (as of 2026).

All lessons · Glossary · Editorial · Kontoo does the math and explains – this is general education, not tax, legal or financial advice.

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