Austrian Government Plans Major Budget Cuts and Savings for 2027-2028

Pension adjustments will remain below inflation levels, generating €280 million in 2027 and €550 million in 2028. The replacement rate for part-time early retirement, which was supposed to increase from 80% to 90% in 2029, will remain unchanged, saving €70 million annually from 2029.

Social Benefit Reductions

Family benefits will see reductions, with €130 million saved from the family bonus and €150 million from not adjusting social benefits to inflation in 2028. Social benefits will also be tightened, with €60 million annual savings expected from stronger consideration of household income.

The document proposes increasing the maximum contribution base for social insurance from €6,930 to €7,080 by 2028, generating €610 million over two years. Pension insurance contributions will rise from 17% to 17.4%, expected to bring €265 million in 2027 and €345 million in 2028.

Tax changes include extending the bank levy until 2029, abolishing home office allowances (saving €70 million annually) and self-employed workplace allowances (€15 million annually). The securities profit allowance will be temporarily suspended from 2027-2029, generating €200 million.

Tax and Contribution Changes

Companies will face new obligations, including contributions to the family burden equalization fund for employees over 60 (generating €500 million) and higher corporate tax rates of 24% (from 23%) for profits over €1 million (€300 million). State-owned companies will increase dividend payments, contributing €150 million in 2027 and €160 million in 2028.

The education sector will see €30 million in administrative savings in 2027 (rising to €50 million in 2028), while €130 million will be invested in early childhood education in 2027 (increasing to €210 million in 2028). Climate-damaging subsidies will be reduced by €40 million starting in 2028.