Austrian income tax 2026: progressive from 25% (€12,816–€20,818) to 55% (above €1,000,000). At €80,000 income, effective income tax rate is approximately 33%. Austria's unique feature: the 13th and 14th month salary (holiday pay and Christmas bonus) are taxed at just 6% up to €620 monthly salary equivalent — a significant advantage for Austrian employees. Employee social contributions add ~18.12%.
6% flat rate on 13th and 14th month payments up to the Sechstel limit (~€5,556 of monthly salary × 2); above that: ordinary income tax rates apply
Employee Social Contributions
~18.12% total: pension 10.25%, health 3.87%, unemployment 3%, accident insurance 1% (employer), care fund 0.5%, housing fund 0.5%
Capital Gains Tax (KESt)
27.5% on dividends, interest, and capital gains from shares (flat final withholding tax — no additional income tax)
Church Tax
Optional: 1.1% of wage income (deductible) for registered church members (primarily Roman Catholic)
Currency
Euro (EUR) — Eurozone member since 1999
Introduction
Austria's income tax system has two notable features: very high top marginal rates (55% above €1M) and a uniquely favourable treatment for 13th and 14th month salary payments. Austrian labour law and collective agreements (Kollektivverträge) typically provide for 14 months of salary per year — the regular 12 months plus holiday pay (Urlaubsgeld) in June and Christmas bonus (Weihnachtsgeld) in November. These additional payments are taxed at a flat 6% rate up to the annual 'Sechstel' (one-sixth) limit.
Vienna consistently ranks as one of the world's most liveable cities (Economist Intelligence Unit and Mercer), and Austria is an EU and Schengen member offering access to the entire European labour market. For professionals in Germany considering alternatives, Vienna's strong international business community (UN headquarters, OPEC, major banking centre) with slightly lower taxes makes it an increasingly popular choice.
Section 01
Austrian Income Tax 2026: What You Pay After Deductions
Austria provides a standard work-related expense deduction (Werbungskostenpauschale) of €132/year and a transport deduction (Pendlerpauschale) for commuters. The effective rates at key income levels (single, standard employment, no commuter deduction beyond basics):
€30,000/year: Income tax ~€4,500. Employee social: ~€5,436. Total deductions: ~€9,936. Net take-home: ~€20,064. Effective rate: 33.1%
These rates make Austria one of the higher-taxed EU countries for employment income. However, the 13th/14th month benefit at 6% tax provides a meaningful offset — on average annual salary, the 13th/14th month payment represents approximately 14% of total compensation taxed at 6% rather than 35%–48%.
Section 02
The 13th and 14th Month: Austria's Most Important Tax Feature for Employees
The 'Sechstel' (one-sixth) rule is unique to Austria and a significant benefit for employees. Here's how it works:
Austrian employees typically receive 14 monthly salary payments: 12 standard + 1 holiday pay (Urlaubsgeld, paid in June) + 1 Christmas bonus (Weihnachtsgeld, paid in November). The combined total of these extra payments — up to one-sixth of annual regular salary — is taxed at just 6%.
The Sechstel limit calculation: If your monthly salary is €5,000 (€60,000/year), your Sechstel limit is €10,000 (2 × €5,000 monthly). Your €10,000 in extra payments (holiday + Christmas bonus) are taxed at 6% = €600 in tax. Under normal rates, €10,000 at the 42% bracket = €4,200. Saving: €3,600/year.
At higher salaries: The benefit is capped. The Sechstel is limited to the equivalent of two monthly salaries in base pay. Any amount above the Sechstel in extra payments is taxed at regular rates. For very high earners (above €99,267), the extra payments above the cap face 50%+.
Section 03
Vienna as a Business Hub: Why Professionals Choose Austria
Vienna offers a combination of factors that attract international professionals despite high income taxes:
UN/International organisations: Vienna is one of four UN headquarters cities, hosting UNIDO, UNODC, IAEA, OPEC, OSCE, and dozens of other international organisations. International civil servants may receive significant tax exemptions.
Banking and finance: Erste Group, Raiffeisen Bank International, Vienna Insurance Group — Austria is the primary banking hub for Central and Eastern Europe.
Quality of life: Vienna ranked #1 most liveable city globally in the Economist Intelligence Unit and Mercer surveys multiple years running. Excellent public transit (monthly pass ~€31), affordable healthcare, free university education.
German language: Vienna shares language with Germany and Switzerland, enabling seamless cultural and professional integration for German-speakers. English proficiency is high.
Austria's proximity to Central and Eastern European markets (Vienna is 1 hour from Bratislava, 2.5 hours from Budapest) makes it a regional hub for multinationals accessing the CEE region.
Section 04
Austria Capital Gains Tax (KESt): Flat 27.5%
Austria's Kapitalertragsteuer (KESt) applies at a flat 27.5% on:
Dividends from Austrian and foreign shares
Interest income (bank accounts, bonds)
Capital gains from selling shares, ETFs, and funds
Cryptocurrency gains (from 2023 onwards — same 27.5% rate applies)
KESt is a final withholding tax — the bank or broker withholds it automatically, and you don't need to include it in your income tax return (it's already final). This 27.5% rate is lower than Austria's ordinary income tax top rates (48%–55%) but higher than Germany's 25% Abgeltungsteuer on investment income.
Primary residence exemption: Gains on the sale of a primary residence (where you lived for at least 5 years, or for at least 2 years consecutively before sale) are exempt from Austrian capital gains tax.
Navigating state income tax — especially if you are relocating, have multi-state income, or are planning retirement — benefits from professional CPA guidance. TaxHub connects you with licensed tax professionals.
⚠ Not for simple single-state returns. Free filing is fine for straightforward W-2 situations.
Austria has 7 income tax brackets in 2026: 0% (up to €12,816), 25% (€12,817–€20,818), 35% (€20,819–€34,192), 42% (€34,193–€66,612), 48% (€66,613–€99,266), 50% (€99,267–€1M), and 55% (above €1,000,000). Most employed professionals face a marginal rate of 42%–48%.
Q
What is Austria's 13th month salary tax treatment?
Austrian employees typically receive 14 monthly salaries (regular 12 + holiday pay + Christmas bonus). The extra two payments — up to one-sixth of annual regular salary — are taxed at just 6%. This is a significant benefit: €10,000 in 13th/14th month payments taxed at 6% instead of 42% saves approximately €3,600/year at mid-level salaries.
Q
What are employee social contributions in Austria?
Austrian employees pay approximately 18.12% in total social contributions: pension 10.25%, health insurance 3.87%, unemployment 3%, accident insurance (very small), and care/housing fund contributions. Employer contributions add approximately 20–21% on top.
Q
How are capital gains taxed in Austria?
Capital gains, dividends, and investment income in Austria are subject to Kapitalertragsteuer (KESt) at a flat 27.5%. This is a final withholding tax — brokers and banks automatically withhold it. Gains on primary residence sales (owned 5+ years or occupied 2+ consecutive years before sale) are exempt.
Q
Is Vienna really the most liveable city in the world?
Vienna has repeatedly topped the Economist Intelligence Unit's Global Liveability Index and Mercer's Quality of Living rankings. Key factors: exceptional public transit, affordable healthcare, free university, very low crime, extensive cultural institutions, and efficient public administration. The monthly public transit pass is approximately €31 — among the cheapest of any major European city.
Q
How does Austria compare to Germany for income taxes?
Austria's top marginal rate (50%–55%) is slightly higher than Germany's (45% + solidarity surcharge effectively 47.5%). However, Austria's 13th/14th month benefit at 6% provides a meaningful offset for employees. Employee social contributions are similar. Germany's Rundfunkbeitrag (broadcasting fee ~€18/month) adds a cost without an Austrian equivalent.
Disclaimer:This guide is for educational purposes only and does not constitute tax or legal advice. Tax rates change annually. Consult a qualified Austrian tax advisor (Steuerberater) for advice specific to your situation.