Austria published the Progression Compensation Act 2025 (Progressionsabgeltungsgesetz 2025, PrAG 2025) in the Official Gazette on 9 October 2024, implementing relief measures announced by the Ministry of Finance in July 2024,
The Act primarily focuses on adjustments to individual income tax brackets and provisions for small businesses.
Individual income tax brackets
The act modifies the income tax brackets for the year 2025.
| Income Range (EUR) | Tax Rate |
| Up to 13,308 | 0% |
| 13,309 to 21,617 | 20% |
| 21,618 to 35,836 | 30% |
| 35,837 to 69,166 | 40% |
| 69,167 to 103,072 | 48% |
| 103,073 to 1,000,000 | 50% |
| Over 1,000,000 | 55% |
While most thresholds have been increased, the top rate threshold of EUR 1 million remains unchanged at 55%.
Relief measures for small businesses
In order to alleviate some financial burdens on smaller enterprises, the threshold for small businesses regulation in the VAT Act will increase to EUR 55,000.
Increase in the mileage allowance
Under the travel allowance regulation, the mileage rates for business or professional use of vehicles will increase to EUR 0.50 per kilometre for cars (currently EUR 0.42), motorcycles (currently EUR 0.24), and bicycles (currently EUR 0.38). The allowance for each additional passenger will also rise from EUR 0.05 to EUR 0.15 per kilometre.
Increase in daily and overnight allowances
The standard daily allowance for domestic business travel will rise from EUR 26.40 to EUR 30.00 per day, while the flat-rate overnight allowance will increase from EUR 15.00 to EUR 17.00 per day.
