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Two-thirds of inflation: Tax rates are raised by 2.27 percent
Austria🏛️ PoliticsCenter9/1/2026

Two-thirds of inflation: Tax rates are raised by 2.27 percent

The Austrian government has announced an increase in income tax brackets for 2027, raising them by 2.27 percent to account for two-thirds of the inflation rate of 3.4 percent. The annual basic exemption threshold, which allows individuals to avoid paying income tax up to a certain amount, increases from €13,539 to €13,846. While the tax brackets are adjusted, they are not fully aligned with inflation, as only two-thirds of the inflation rate is considered. The top marginal tax rate remains unchanged at 55 percent for incomes above €1 million. The adjustment aims to counteract 'cold progression,' a phenomenon where inflation leads to higher effective tax rates due to changes in tax brackets. The decision follows a similar approach taken in 2026, with additional relief measures planned through government-set policies.

Austria’s government has raised income tax brackets by 2.27 percent for 2027, reflecting two-thirds of the inflation rate of 3.4 percent recorded earlier this year. The adjustment, announced by Finance Minister Markus Marterbauer of the Social Democratic Party (SPÖ), aims to mitigate the effects of rising prices on taxpayers. The annual basic exemption, the amount of income that is free from income tax, will increase from €13,539 to €13,846. This change will take effect starting in 2027. The tax brackets for different income levels have been adjusted accordingly. For incomes between €13,846 and €22,491, the marginal tax rate remains at 20 percent. Additional income up to €37,285 will be taxed at 30 percent, while earnings above that threshold but below €71,960 will face a 40 percent tax rate. Income exceeding €107,236 will be subject to a 50 percent tax rate. The top marginal tax rate of 55 percent continues to apply to incomes over €1 million. Various deductions and thresholds for benefits are also being increased by the same percentage. This annual adjustment of income tax brackets was introduced in 2023 to address the phenomenon known as “cold progression,” which refers to the gradual increase in taxes due to inflation. However, the adjustments are made automatically based on only two-thirds of the inflation rate. According to the law, the remaining third of revenue gains should be offset through relief measures determined by the government, primarily within the realm of income taxation. These so-called “variable thirds” were retained in 2027, just as they had been in the previous year, for budgetary reasons. The decision to adjust the tax brackets follows a broader fiscal strategy aimed at balancing the impact of inflation with necessary budget constraints. While the automatic adjustments help prevent the escalation of tax burdens due to rising living costs, the government retains discretion over how to manage the additional revenues generated by inflation. This approach allows policymakers to allocate resources strategically, particularly during periods of economic uncertainty. Public reaction to the announcement has varied. Some taxpayers appreciate the effort to align tax brackets with inflation, seeing it as a step toward fairness in the tax system. Others remain concerned about the overall financial burden, especially given the ongoing cost-of-living crisis. Critics argue that the retention of the variable third could lead to higher public spending or potential cuts in other areas of the budget. The government has yet to provide detailed plans on how these funds will be used. The changes to the tax structure are part of a larger set of economic policies designed to stabilize the Austrian economy amid global challenges such as energy price fluctuations and supply chain disruptions. The government faces pressure to maintain fiscal discipline while addressing the needs of households and businesses affected by high inflation. With the upcoming year's tax adjustments already in place, attention will shift to how effectively these measures can alleviate the pressures faced by citizens and support economic recovery. The new tax rates and exemptions will be implemented alongside other policy initiatives aimed at reducing the strain on consumers. Among these is the extension of the fuel price brake, which limits the increase in gasoline and diesel prices. This measure, effective through September, is intended to ease the burden on households and businesses reliant on transportation. As the year progresses, further announcements regarding economic stabilization efforts are anticipated.

How this report was made. Objective News wrote this report from 3 source articles, using AI-assisted synthesis under our methodology. It is our own text, not a copy of any single outlet. Read our methodology.

Responsible editor: Matej BašaSpotted an error? Report it

3 reports

ORF News logoORF NewsState / PublicCenterFactual 95Objective 859/1/2026
Inflation adjustment: tax rates increased by 2.27 percent

Austria's Finance Minister Markus Marterbauer (SPÖ) has announced a 2.27% increase in tax brackets for 2027, effective next year. This adjustment aligns with two-thirds of the significant inflation rate of 3.4%. The annual basic exemption threshold, up to which no income tax is paid, will rise from €13,539 to €13,846. Tax rates for various income levels will also be adjusted accordingly, with higher brackets facing increased taxation. The tax bracket adjustments were introduced in 2023 to combat 'cold progression,' a gradual increase in taxes due to inflation. However, only two-thirds of the inflation rate is automatically applied, while the remaining third is retained by the government for potential relief measures.

Bias read (Center): The article presents factual information about tax bracket adjustments based on inflation, without overtly favoring any political side. It includes details about the government's decision-making process and the rationale behind the partial alignment with inflation rates, maintaining neutrality in ph

Why factuality (95): ORF News provides detailed information about the inflation adjustment, including exact percentages, the role of Finance Minister Markus Marterbauer, and the specifics of the tax brackets. The figures align with those reported by Der Standard, supporting the accuracy of the information presented.

Why objectivity (85): The reporting is balanced, presenting facts without emotional language or clear ideological slant. It includes quotes and references to official sources, maintaining an objective tone throughout.

Der Standard logoDer StandardIndependentCenterFactual 95Objective 859/1/2026
Two-thirds of inflation: Tax rates are raised by 2.27 percent

The Austrian government has announced an increase in income tax brackets for 2027, raising them by 2.27 percent to account for two-thirds of the inflation rate of 3.4 percent. The annual basic exemption threshold, which allows individuals to avoid paying income tax up to a certain amount, increases from €13,539 to €13,846. While the tax brackets are adjusted, they are not fully aligned with inflation, as only two-thirds of the inflation rate is considered. The top marginal tax rate remains unchanged at 55 percent for incomes above €1 million. The adjustment aims to counteract 'cold progression,' a phenomenon where inflation leads to higher effective tax rates due to changes in tax brackets. The decision follows a similar approach taken in 2026, with additional relief measures planned through government-set policies.

Bias read (Center): The article presents the tax bracket adjustments as a factual update based on government policy and economic data, without overtly favoring any political ideology. It reports the decision made by Finance Minister Markus Marterbauer (SPÖ) and includes quotes from official sources like APA. There is a

Why factuality (95): Der Standard mirrors the content of ORF News with similar figures and explanations. Both articles reference the same inflation rate, percentage increase, and tax bracket adjustments, reinforcing the consistency and reliability of the information.

Why objectivity (85): The article maintains a neutral tone, using formal language and avoiding subjective commentary. It presents the information as a factual update without expressing personal opinions or biases.

Kleine Zeitung logoKleine ZeitungParty-alignedCenterFactual 50Objective 608/31/2026
Fuel price brake extended: What applies in September and what does not

The Austrian government has extended the 'Spritpreisbremse' (fuel price brake), a temporary measure designed to limit rising fuel costs for consumers. The extension applies to the month of September, but certain conditions and exceptions remain in place. The policy aims to provide financial relief to households and businesses affected by high energy prices. However, specific details regarding which fuel stations are covered and any potential changes to the regulation are still unclear. The continuation of this policy reflects ongoing efforts to manage inflationary pressures within the economy.

Bias read (Center): The article provides a factual overview of the policy extension without overtly favoring any particular political stance. It outlines the measures taken by the government and highlights the economic context without using biased language or selective sourcing.

Why factuality (50): The article from Kleine Zeitung discusses the extension of the fuel price brake but does not provide specific details about the inflation adjustment or tax bracket changes mentioned in the other sources. It lacks concrete data and references to official documents, making it less factual compared to

Why objectivity (60): The tone remains neutral and informative, focusing on the continuation of the fuel price brake policy. There is no overt bias or emotional language, though it does not delve into the broader implications of the tax adjustments.

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