Countdown to 2026: Benefits of Overtime Work Threatened Amid Budget Crisis
The Austrian government is facing heated discussions about whether the current tax exemptions for overtime will continue after 2025. Economy Minister Wolfgang Hattmannsdorfer (ÖVP) has expressed his clear support for maintaining the increase in overtime pay, which is set to end at the end of next year. He said on Saturday, "Those who work more should earn more," emphasizing the importance of rewarding extra effort.
As part of the 2023 tax reform that abolished the so-called 'cold progression', employees received expanded tax exemptions on overtime. During 2024 and 2025, the monthly tax-exempt limit increased to 200 euros for up to 18 hours of overtime per month. However, starting in 2026, the amount is expected to decrease to a maximum of 120 euros for 10 additional hours. Hatmansdorfer confirmed that 'the right incentives are essential', noting that every additional hour of work 'boosts the Austrian economy and supports its recovery.'
A spokesperson for Hatmansdorfer confirmed that discussions within the coalition are still ongoing. The minister hopes to implement the continuation of the current system starting from 2026. However, the government acknowledges that maintaining these benefits may be difficult due to the strained financial situation in the country.
The Ministry of Finance, led by Minister Markus Marterbauer (SPÖ), pointed to the coalition agreement stating that overtime and bonuses will remain tax-exempt starting in 2027 – if the budget allows it. The ministry's statement said: "All three parties agreed during the government formation negotiations to implement this reduction in 2026."
Labor Minister Korina Schumann (SPÖ) added another dimension to the discussion, explaining that employees worked over 42 million hours of unpaid overtime last year, either in time or money. She emphasized that before adjusting tax rules, this imbalance must be addressed to ensure fairness for all workers in Austria.