Austria reduces tax-exempt bonuses for overtime starting in 2026
The Austrian Ministry of Finance confirmed that the tax-exempt bonus system for overtime work will be reduced starting in 2026, reverting to the rules that were in place before 2024. This announcement comes amid widespread political controversy and increasing dissatisfaction from both workers and employers regarding the reduction of financial benefits.
Over the past two years, employees have benefited from a temporary increase in tax-exempt bonuses for overtime — with up to 18 bonuses allowed at 50 percent, with a maximum of 200 euros per month. This measure was implemented to alleviate the effects of inflation, but it will end at the end of 2025. Starting in January 2026, the limit will return to 120 euros per month at most, covering only ten bonuses for overtime.
The Ministry of Finance clarified that the decision was made in agreement between the three ruling parties during the coalition negotiations. A spokesperson for the ministry said: "It was clear from the beginning that this measure is temporary." However, Minister Wolfgang Hartmannsdorfer from the Ministry of Economic Affairs expressed his desire to maintain the expanded exemptions, considering that they help workers cope with rising living costs.
The Ministry of Finance indicated that the unification of the budget is the main reason for not extending the tax exemption, explaining that the continuation of the program will cost about 150 million euros annually, which is an amount "not possible without parallel funding." However, the government program includes the possibility of reinstating the expanded exemption in 2027, if financial conditions allow.
At the same time, new statistics revealed another concerning issue: unpaid overtime hours. In 2024, one in four overtime hours in Austria went unpaid, according to Statistics Austria data. Employees worked nearly 169 million overtime hours, but about 42 million of those hours were not compensated financially — representing a significant loss for both workers and the state. As the reduction of privileges approaches, the debate in the country about wage fairness and workload intensifies.