Fairer taxation for citizens increases purchasing power
Vienna (OTS) – The abolition of cold progression is the core of the federal government's relief measures and visibly strengthens purchasing power. Cold progression is a phenomenon that burdens taxpayers unnoticed. It occurs when income increases with inflation, but the limits of tariff bands and the amounts of salary and income tax deductions remain static. This means that citizens have to pay taxes on a higher proportion of their income and their income loses purchasing power.
An example: a worker with a gross monthly income of around 2,500 euros will receive a salary increase of around 9% in 2024 to compensate for inflation. By abolishing cold progression, the worker's burden is reduced by around 550 euros, which also increases net income by around 9%, while without the abolition of cold progression, net salary would only increase by around 7%.
“By abolishing cold progression, we are sending a clear signal for more fairness in the tax system. This measure alleviates the burden on citizens in the long term, particularly every year. It is important to us that people feel concretely how their disposable income is improving, especially in times of rising costs of living. I am pleased that we were able to do this in 2023 and the salary increases will also be fully achieved in 2024”, said Finance Minister Magnus Brunner.
A year without cold progression
With the abolition of cold progression, the increasing tax increases ended. In the first year without the progression of the cold, 2023, people saved more than 1.85 billion euros. Next year, taxpayers will save another 3.65 billion euros.
The effect of the abolition of cold progression always becomes evident from January 1st of the respective year, since tariff limits and deductions are valued at this time.
Questions and contact:
Federal Ministry of Finance, Press Office
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