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Following the expiration of the tax-free employee bonus possibility in 2024, an "improved" tax-free employee bonus was announced for 2025 and 2026 as part of the introduction of the government's program for 2025 to 2029 under the title "Doing the right thing now. For Austria." This new bonus is intended to enable employers to reward their employees for their performance without paying additional taxes.
For the year 2025, all employers in Austria should be able to pay their employees a bonus of up to EUR 1,000, that is exempt from wage and income tax. This bonus should not be tied to a basis in the collective bargaining agreement or to the existence of a works council agreement and should therefore be payable at the employer's discretion. Granting of the bonus should not be an obligatory benefit for all employees, but a voluntary benefit for employers to reward individual employee performance in a targeted manner. The government has already announced a budget for the years 2025 and 2026. The decision on whether the bonus model will be extended will be made from 2027.
Currently, there is no concrete legislative proposal for the planned new bonus model. The details therefore remain to be seen. Based on the requirements of previous models, the tax-free employee bonus will most likely have to be an additional payment not normally granted. Payments already made on the basis of an existing performance agreement (e.g., regular recurring bonus payments) will most likely be excluded from preferential treatment.
The tax-free employee bonus is an excellent way for employers to reward outstanding performance. Companies can reward their employees in a targeted manner without additional taxes. This boosts motivation and satisfaction among employees and makes Austria a more attractive location for qualified specialists.
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