Austria's Budget Measures Act 2026 took effect on 1 July, introducing amendments to tax legislation that include new income tax reporting requirements, higher tax-free employment allowances, a temporary employee bonus and updated VAT rules, alongside changes affecting administrative fees and enforcement powers.
Austria’s Budget Measures Act 2026 (Budgetmaßnahmengesetz 2026) entered into force on 1 July 2026 after being published in the Official Gazette (BGBl. I 43/2026) on 30 June. The legislation amends a range of federal laws with measures intended to promote tax fairness, combat tax fraud, reduce the tax burden on workers and simplify administrative procedures.
Income tax measures
The Act introduces new reporting requirements under the Income Tax Act (EStG 1988) for taxpayers whose income from certain capital assets or derivatives exceeds EUR 100,000 in an assessment year. In cases where tax was not initially assessed because of international asset transfers, affected taxpayers must submit annual written confirmation through FinanzOnline that no event triggering a tax liability has occurred.
The legislation also raises the monthly tax-free limit for hardship, danger and dirt allowances, together with supplements for Sunday, holiday and night work to EUR 400. The increase applies retroactively to pay periods ending after 31 December 2025, with employers required to adjust payroll calculations by 30 September 2026.
In addition, employers may grant a tax-free Employee Bonus 2026 (Mitarbeiterprämie) of up to EUR 500 for the period from July to December 2026. The payment must be additional to existing remuneration arrangements. Where combined with a tax-free Gewinnbeteiligung, the total tax-free amount for 2026 may not exceed EUR 3,000. Exceeding this limit will require the taxpayer to undergo a formal tax assessment.
Administrative and public sector changes
The legislation introduces new residence permit fees under the Asylum Act 2005, with applications costing EUR 39 for individuals under 16 years of age and EUR 91 for applicants aged 16 and over. The fees apply to applications submitted after 11 June 2026.
From 1 August 2026, reimbursement for public transport expenses for civil servants will be capped at the cost of a nationwide annual Klimaticket, replacing the previous fixed reimbursement limit.
Prison allowances
The Prison Act (Strafvollzugsgesetz) increases various daily allowance rates within the prison system from EUR 3.98–EUR 5.97 to EUR 7.79–EUR 11.68. From 2027, these rates will be automatically indexed to the national wage index once the increase reaches a EUR 0.20 threshold.
Price marking rules
Changes to the Price Marking Act (PrAG) allow businesses to either display tourism taxes separately or include them in the total gross price.
The Act also increases penalties for price marking violations. Standard fines rise to EUR 2,500, while certain offences may attract penalties of up to EUR 10,000. Repeated violations may result in fines of up to EUR 15,000. Before initiating a penal proceeding, authorities must issue a written warning and provide the entrepreneur with a reasonable period to remedy the price marking breach.
Earlier, Austria’s Federal Council (Bundesrat) approved the Budget Measure Act 2026 on 25 June 2026, adopting a package of amendments to various tax laws aimed at promoting tax fairness, combating tax fraud, reducing the tax burden on workers and simplifying administrative procedures.
