Wage increases and tax advantages: This is how you can benefit from May 2025!

Wage increases and tax advantages: This is how you can benefit from May 2025!

On May 31, 2025 there will be significant changes to the labor market and tax law in Austria. The average refund for tax equalization is around 1,000 euros. This news is of particular interest to many employees as it comes at the same time as a salary increase for many employees.

From May 2025, the minimum wages will increase in various sectors. There will be an increase of 2.65 percent in the paper industry, while the minimum wages in the cardboard industry will increase by 2.45 percent. These wage increases apply retroactively from the beginning of May and can lead to a maximum increase of 110 euros per month. This means that the new minimum wages are between 2,242 euros for wage group 6 and 3,327 euros for special workers.

Special features for trainees and catering

Apprentice salaries are increasing at the same rate, providing attractive prospects for young people in their professional lives. The minimum wage of over 2,000 euros per month also reaches a new dimension in the catering and hotel industries.

In addition, McDonald's employees, numbering approximately 9,600 people, received a 3.9 percent pay increase starting in May 2025. This increase is supported by a separate collective agreement, which also provides for an additional day of leisure for employees. Apprentice income at McDonald’s also increases by 4.1 percent.

Tax adjustments for 2023 and 2024

In connection with the salary increases presented, the tax framework is also important. In 2023, the basic tax allowance was increased by 561 euros to 10,908 euros. A further increase of 696 euros to 11,604 euros is planned for 2024. The child allowance was also increased from January 2023 and is now 8,952 euros, with a planned increase to 9,312 euros next year.

In addition to these adjustments, the income tax rate is adjusted to inflation in order to counteract creeping tax increases. From 2024, the input tax rate of 14 percent will apply to taxable income above the new basic tax allowance. The top tax rate of 42 percent continues to apply from an income of 66,761 euros, while the rich tax rate of 45 percent remains unchanged at 277,826 euros.

With the new developments in the wage market and the tax changes, employees in Austria are facing a variety of financial adjustments that affect both direct income and tax relief.

For further information, helpful online tools such as the gross-net calculator can be found on Finanz.at, which quickly and easily calculates the new salary, wage tax and social security contributions. More details about the tax changes can be found on the website Federal Ministry of Finance.

For a comprehensive overview of the current salary increases and tax equalization, please also visit Finanz.at.