The Austrian Ministry of Finance has published a draft bill for consultation introducing tax and social security incentives, including an activity tax allowance and pension contribution relief, to encourage continued employment or self-employment after retirement age from 1 January 2027.
The Austrian Ministry of Finance has published a draft bill on 17 April 2026 for consultation introducing incentives aimed at increasing the labour force participation of individuals continuing employment or self-employment after reaching the standard retirement age.
The draft proposes a taxable income reduction through an activity tax allowance of EUR 1,250 per month (EUR 15,000 per year). It also provides for an exemption from employee pension insurance contributions, or a contribution reduction in the case of self-employed individuals. The measures are intended to apply from 1 January 2027.
In addition, the legislative draft sets out broader amendments to Austrian social security and tax laws designed to increase labour force participation among older individuals. This includes financial incentives for employees who continue working beyond the legal retirement age, as well as a tax-exempt activity allowance for active earners. It also proposes shifting a portion of pension contributions to the insurance system.
The draft further includes measures for employers, requiring companies with low proportions of older staff to receive informational guidance and support services to encourage age-diverse hiring practices.
To finance the reforms, the proposal establishes a Labor Market Transformation Fund and reallocates capital from the abolition of specific higher-insurance schemes.
Extensive evaluations are scheduled for 2030 to assess the impact of the measures on employment rates, budgetary stability, and gender equity.
Comments on the draft bill may be submitted until 22 May 2026, ahead of the planned implementation date of 1 January 2027, subject to legislative approval.
