Key points: What does Austria’s 2022 budget mean for you?

Finance Minister Gernot Blümel surrounded by media
German courses, a climate bonus and increased child benefits are some of the items in Finance Minister Gernot Blümel's budget proposal. Photo: BKA/Wenzel
Austria's government on Wednesday presented its budget plan for the next year, with a much-discussed reform to taxes as well as other changes that will directly affect residents.

“With this budget, we are setting the course for the future, out of the crisis,” said Finance Minister Gernot Blümel as he announced the 2022 budget in parliament.

After his first budget focused on Covid measures, he said the new one marked a turn to “sustainable budget policy”.

He said that the proposals would “leave Austrians with more money left in their wallet for living”.

But what exactly does that mean for your life in Austria, and your wallet? Here’s a look at some of the key measures in the 2022 budget.

Covid measures

Although the Finance Minister presented this as a forward-looking budget, the impact of the pandemic is still clearly felt, with €3.7 billion for care services, and €50 million for training nurses each year in the period 2022 to 2024, plus €3.2 billion to the healthcare sector to cover Covid-19 vaccine costs as well as preparations for preparing and coping with future pandemics.

Higher fuel prices

One of the key points of the budget was a so-called eco-social tax reform, described by Blümel as “the greatest transformation of the tax system in the Second Republic [since 1955]”. 

We’ll start with the eco part. A tax will be introduced on carbon dioxide emissions, starting at €30 per tonne in 2022, to rise incrementally over the next few years (€35 in 2023, €45 in 2024) before reaching €55 per tonne in 2025.

This means higher fuel prices, but how high exactly? According to estimates from Austria’s Economic Research Institute, you can expect a litre of diesel to rise by 10.1 cents in 2022, a litre of oil fuel to rise by 10.1 cents, and gas prices to rise by seven cents per kilowatt hour.

Climate bonus

Taxpayers will receive a bonus to help compensate them for the increased costs, which is staggered based on where you live, so that those in rural areas — who need to rely more on their cars — get more.

The bonus will range between €100 to €200 per adult (and half these amounts for children), based directly on public transport provision in your local area. The bonus is a particularly good deal in 2022, because it will be paid out for the full year even though the carbon tax only comes in in July.

One thing we don’t yet know is exactly how this money will be distributed to residents; the government is still working on the specific system.

Blümel said the intention was to offer “incentives” to those who are able to switch to more climate-friendly options, and not to “punish” those with no alternative.

“Someone who lives right in front of an underground train station will find it easier to act in a climate-friendly way that a commuter or a single mother in the countryside,” he noted. 

The eco tax is a key achievement for the Green Party, the junior party in the coalition, but has been criticized by environmental groups including WWF for not going far enough to make a real difference and help Austria reach its climate goals.

Income tax cuts

As well as introducing the carbon tax, the other major aspect of the tax reform are some income tax cuts.

From July 2022, the second band of income tax will pay 30 percent tax rather than 35, which Blümel said would mean up to an extra 650 extra in their pocket each year.

That will be followed a year later by lowering the third band from 42 to 40 percent tax, bringing savings of up to 580 per year.

Support for the unemployed

A total of €170 million is earmarked for a programme called the Corona-Joboffensive which aims to help job-seekers develop their skills, as well as €250 million for a programme called Springboard, focusing on supporting the long-term unemployed.

This was one area of the budget to come under criticism, with the Chamber for Workers and Employees (Arbeitkerkammer) saying unemployment benefits should have been increased.

German courses

The Austrian Integration Fund offers a range of German courses for foreigners, and €55.4 million was set aside in the budget to support these courses.

Sickness payment reductions

Those on low and medium incomes will see a reduction in the amount they pay towards their health insurance starting from July 2022, with a 1.7 percentage point drop.

Increase in family bonus

Good news for parents: the family bonus will be increased from €1,500 to €2,000, meaning up to €500 per child per year. 

Those who are eligible for Austria’s Kindermehrbetrag, an additional child allowance for low earners (those who do not earn enough to reach the income tax threshold) will also see these payments increase from €250 per year to €450.

Tablets for schoolkids

With over 10 billion earmarked for education in 2022, two focuses for schools were extending mental health support for students and ramping up digitalisation. 

By the academic year 2023/2024, the government has said that every student in grades 5-8 (usually 10-14-year-olds) would have an electronic device to use at school.


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