Income tax in Austria 2026 and 2027: tax bands and a worked example

In Austria the first €13,539 of your income is tax-free in 2026, and the first €13,846 in 2027. Above that the rate rises in steps from 20 % to 50 %, and only income above €1 million is taxed at 55 %, until 2029 (§ 33 Abs. 1 EStG 1988).

Law as of 11 November 2026

The band limits are adjusted for inflation every year. For 2027 they rise by 2.2666 %, set in the Inflationsanpassungsverordnung 2027 (inflation adjustment regulation, BGBl. II Nr. 260/2026 of 31 August 2026). The 2027 values are therefore already published and apply from 1 January 2027.

The tax bands for 2026 and 2027

Legal basis: § 33 Abs. 1 EStG 1988 for 2026; § 3 Inflationsanpassungsverordnung 2027 for 2027. The €1 million limit is not adjusted. The 55 % rate applies only to the calendar years 2016 to 2029; after that, income above €1 million is also taxed at 50 %.

For comparison, 2025: €13,308, €21,617, €35,836, €69,166 and €103,072. If you earn the same in 2026 as in 2025, you pay slightly less tax.

How the marginal rate works

Each band's rate applies only to the part of your income that falls into that band. With an income of €40,000 in 2026 you do not pay 40 % on everything, but:

That is 18.6 % on average (€7,447.20 ÷ €40,000). The marginal rate of 40 % tells you what happens to each extra euro: €1,000 more profit at an income of €40,000 costs €400 more tax. Earning more always pays, even when you move into a higher band.

With the tax accumulated at the end of each band, you can work out any income quickly:

The formula: tax up to the start of your band plus the marginal rate × (your income minus the start of the band).

How much income tax on which income?

Tariff tax before tax credits, calculated to the cent from § 33 Abs. 1 EStG 1988 and the Inflationsanpassungsverordnung 2027:

What counts as income and what comes off afterwards

The tariff applies to your income (Einkommen) as the EStG defines it: the sum of your earnings, for example from a trade (Gewerbebetrieb), self-employed work and employment, after deducting special expenses (Sonderausgaben) and extraordinary burdens (außergewöhnliche Belastungen). For the self-employed, that is the profit after all business expenses and after the profit allowance (Gewinnfreibetrag).

Tax credits (Absetzbeträge) work differently: they do not reduce your income but are deducted directly from the tax the tariff produces. First the Familienbonus Plus (child tax credit), then the other credits, such as the sole earner or single parent credit (Alleinverdiener- or Alleinerzieherabsetzbetrag) and, for employees, the commuter credit (Verkehrsabsetzbetrag) (§ 33 Abs. 2 to 6 EStG 1988). If the result is a tax below zero, part of it is paid out in certain cases (§ 33 Abs. 8 EStG 1988).

Capital income with a special rate stays outside the tariff: dividends are taxed at 27.5 % KESt (capital gains tax), interest on bank deposits at 25 % (§ 27a Abs. 1 EStG 1988). Employees' 13th and 14th salaries are also taxed separately: in 2026 the first €620 at 0 % and the next €24,380 at 6 % (§ 67 Abs. 1 EStG 1988).

Worked example: sole trader with €50,000 profit

Lena is a graphic designer with a Gewerbeschein (trade licence) and makes a profit of €50,000 in 2026 after all business expenses. She has no other income, no special expenses and makes no investments.

1. Grundfreibetrag (basic part of the profit allowance): 15 % of €33,000 = €4,950 (§ 10 Abs. 1 Z 3 EStG 1988).
2. Taxable income: €50,000 − €4,950 = €45,050.
3. Tax up to €36,458: €6,030.40 (from the table above).
4. The rest in the 40 % band: €45,050 − €36,458 = €8,592 × 40 % = €3,436.80.
5. Income tax 2026: €6,030.40 + €3,436.80 = €9,467.20.

Her average rate is 21.0 % of her income (€9,467.20 ÷ €45,050), her marginal rate 40 %. Without the Grundfreibetrag she would pay exactly €11,447.20 on €50,000: the allowance saves her €1,980 (€4,950 × 40 %).

The same taxable income of €45,050 costs only €9,273.20 in 2027: €6,167.20 up to €37,285 plus (€45,050 − €37,285) × 40 % = €7,765 × 40 % = €3,106.00. That is €194 less, purely from the higher bands. How much more you save by investing beyond the Grundfreibetrag is shown by the free profit allowance calculator.

Why the bands rise by only two thirds in 2026 and 2027

The band limits are adjusted for inflation every year to offset bracket creep (kalte Progression) (§ 33a EStG 1988). Two thirds of inflation flow into the bands automatically; the remaining third is currently suspended.

• 2026: the bands rose by 1.7333 %, two thirds of the 2.6 % inflation rate.
• 2027: they rise by 2.2666 %, two thirds of 3.4 % (average July 2025 to June 2026).
• Until 2029: the remaining third is suspended for the adjustments of 2025 to 2028, so for the tax years 2026 to 2029 (§ 124b Z 477 EStG 1988).

For comparison: in 2025 the lower five bands still rose by 3.8333 %, more than two thirds of the 5.0 % inflation at the time.

Austria is not Germany

Anyone searching for "Grundfreibetrag" often lands on German pages. In Germany it is the tax-free zone of the tariff. In Austria that zone is simply the first band (0 % up to €13,539), and the Grundfreibetrag is something else: the part of the profit allowance the self-employed get without investing, at most €4,950 (§ 10 EStG 1988). Austria also has no solidarity surcharge and no church tax collected by the tax office. German tax tables and gross-to-net calculators therefore give wrong results for Austria.

Income tax or corporate tax?

The banded tariff applies only to natural persons: sole traders (Einzelunternehmer), new self-employed (Neue Selbständige), freelancers, partners in partnerships and employees. A GmbH or FlexCo pays 23 % corporate tax (Körperschaftsteuer) on its profit instead (§ 22 Abs. 1 KStG 1988), at least €500 a year. When it distributes profits, the shareholder pays 27.5 % KESt. A shareholder-director holding more than 25 % pays the tariff on their director's pay. What applies from 2027 to withdrawals through the GmbH shareholder account is covered in its own guide.

When you must file a tax return

Without wage income you must file an income tax return if your income is above €13,539 in 2026 and above €13,846 in 2027. If you also have a payslip (Lohnzettel) and a reason for a mandatory assessment, the limit is €14,769 (2026) and €15,104 (2027) (§ 42 Abs. 1 Z 3 EStG 1988). You file the 2026 return through FinanzOnline by 30 June 2027, or on paper by 30 April 2027 (§ 134 Abs. 1 BAO).

How to estimate your tax for 2026 and 2027

1. Take your expected profit after business expenses.
2. Deduct the profit allowance: 15 % of profit up to €33,000 without investment, above that only with qualifying investments.
3. Add other income, for example from employment, and deduct special expenses.
4. Find your band in the "tax up to there" table and work out the rest at the marginal rate.
5. Deduct tax credits such as the Familienbonus Plus from the tax.
6. Set aside one twelfth of it every month.

Before the year ends you can still lower your 2026 tax, for example with investments for the profit allowance: the year-end tax tips show what counts until 31 December.

Norman in Austria

Norman is an AI bookkeeping app for the self-employed and companies. In Germany and Poland it captures receipts by photo, matches bank transactions, writes invoices and prepares tax returns; for Austria, Norman is in preparation. Until then you will find free guides on Austrian law, the profit allowance calculator and everything about Norman's launch in Austria here.

Frequently asked questions

How much can I earn tax-free in Austria in 2026?

Up to €13,539 of income a year is free of income tax in 2026, and up to €13,846 in 2027. If you are self-employed, the Grundfreibetrag of up to €4,950 comes on top, because it reduces your profit before the tariff applies.

Do I pay 40 % on all my income if I am in the 40 % band?

No. In 2026 the 40 % applies only to the part above €36,458. On an income of €40,000 you pay €7,447.20 tax, 18.6 % on average.

What is the top income tax rate in Austria?

50 % on income above €104,859 (2026) or €107,236 (2027). Above €1 million it is 55 % up to and including 2029.

When do the new 2027 tax bands apply?

From 1 January 2027, for the whole calendar year 2027. The self-employed feel them in the 2027 assessment, which they file in 2028.

Does the tariff also apply to my GmbH?

No. The GmbH pays 23 % corporate tax. You pay the banded tariff only on what you receive personally, such as director's pay; distributions are taxed at 27.5 % KESt.