Budget shock – This is how hard the new austerity package hits you
Austria is preparing a major austerity package worth more than €5 billion for the 2027/28 double budget, with the government warning that nearly everyone will have to contribute, according to Finance Minister ماركوس مارترباور (SPÖ).
Key details are still being negotiated ahead of the budget speech in parliament on 10 June, but the measures already outlined point to lower net salaries for many workers, weaker pension increases, and family-related support that will not keep up with inflation.
A central change targets unemployment insurance (Arbeidslosenversicherung — unemployment insurance). At the moment, low-income earners up to €2,225 gross per month pay no unemployment insurance contribution, and the rate increases gradually until the full 2.95% applies from €2,630 gross. Under the new plan, all employees would pay the full 2.95%, a shift expected to hit part-time workers especially hard—often women. The article cites an example where someone earning €2,000 gross could receive about €60 less per month in their bank account.
Home office benefits are also set to shrink. The tax exemption for a home office lump sum (Homeoffice-Pauschale — home office allowance) paid by employers, introduced during the Corona period, is expected to be removed, meaning some remote workers may lose a tax-friendly perk.
Family and social benefits are planned to remain frozen rather than being adjusted for inflation. This affects payments such as the Familienbeihilfe (family allowance), childcare support, and sick pay, although reports indicate Pflegegeld (care allowance) will continue to be valorized (inflation-adjusted). In addition, the Familienbonus (family bonus) will stay in place but be reformed with cuts: the current €2,000 per year per child would only be fully available from age three if both parents work, while single parents would be exempt from that new condition.
Pensions are also expected to be restrained in 2027 and 2028, with increases not fully matching inflation. State Secretary باربرا إيبيـنغر-ميدل (ÖVP) argued that full inflation adjustments would make consolidation impossible, while Minister ماركوس مارترباور said pensions could be adjusted about a quarter of a percent below inflation. It remains unclear whether this would apply to everyone, including minimum pensioners, or whether a phased model will be negotiated with pensioners’ representatives.
Taxes will rise in specific areas, including higher duties on high-proof alcohol. The tax on spirits (Schnaps/Spirituosen — schnapps and spirits) is reported to increase by 30%. With Austria’s current alcohol tax at €12 per liter of pure alcohol, a 0.7-liter bottle of vodka at 40% alcohol currently carries about €3.36 in tax; under the plan, this would rise to around €4.37—roughly €1 more per bottle.
Higher earners are also expected to contribute more, making up about 12% of the total consolidation and roughly €590 million in 2028. Measures include raising the maximum contribution base for health insurance by €200, increasing real estate capital gains tax, and raising levies on very high pensions (security contributions).
Companies would carry the largest share of the €5.1 billion consolidation, with just under €2.2 billion, according to Finance Ministry figures. In return, a long-demanded reduction in non-wage labor costs is planned for 2028—by one percentage point—costing about €2 billion, which Vice-Chancellor أندرياس بابلر (SPÖ) said companies effectively finance themselves. This includes lowering the employer contribution to the Familienlastenausgleichsfonds, FLAF (Family Burden Compensation Fund — family burden equalization fund) from 3.7% to 2.7%, while also extending FLAF payments to employees over 60 from 2028, which previously did not apply.
Additional business measures include raising corporate tax (Körperschaftsteuer — corporate income tax) from 23% to 24% for companies earning more than €1 million in profit, abolishing the tax-free profit allowance for securities, and keeping the increased bank levy in place.