AN OVERVIEW OF THE MEASURES TO COMBAT INFLATION BY THE FEDERAL STATE AND FEDERAL GOVERNMENT

A wave of inflation is headed for the Austrian populace. The federal government and the states are responding and are allocating more than 35 billion Euro for a wide range of measures intended to provide relief to citizens and counteract the consequences of inflation.

We have prepared an overview of these measures.

WHAT IS VALID FOR EVERYONE?

• The climate bonus
  The climate bonus is a bonus payment for all persons whose primary residence has been in Austria for at least six months in 2022 - regardless of citizenship or age. Due to current inflation and prices rising as a result, every adult will be paid a one-off lump sum of 500 Euro in 2022. Children and adolescents up to 18 years of age will receive half this amount, that is, 250 Euro. Everyone who keeps their data up-to-date on FinanzOnline will receive a payment directly to their account and everyone else will be sent vouchers. The climate bonus is being paid out since September 2022. By the end of October 2022, all climate bonuses must be paid out.
   
• Bracket creep will be eliminated in some cases
  In order to counteract bracket creep, the threshold amounts of the lowest two pay scale levels will be raised above the level of inflation (by 6.3 %). This will provide relief especially for low and medium incomes. To date, citizens exceeding minimum income 11,000 Euro are liable to pay tax. The Federal Government has agreed to raise the minimum income level to 11,693 Euro next year. The threshold amounts for further pay scale levels will be increased by two thirds the rate of inflation. This corresponds to an adjustment of 3.47 ̇% and will also provide relief for people with average and above-average income levels. Here, you can determine whether you will be able to take home more of your gross income.
   
• Social benefits adjusted to inflation
  The high rate of inflation has led to widespread calls for the valorization of social benefits. This will come next year. Family assistance, childcare allowance, student aid and other government benefits are to be adjusted to inflation yearly. Rehab, sickness and retraining allowance are to be continually adjusted to the consumer price index. To date, the unemployment benefit and emergency assistance have not been adjusted, which has been sharply criticized by the Austrian Chamber of Labor.

INCOME-RELATED MEASURES

• Housing security
  The Wohnschirm (housing security) is a measure originally created during the first corona lockdown in order to support people affected by short-time work or who have lost their jobs with their rental payments. Due to inflation, the Wohnschutzschirm (housing security) is now being expanded and will continue to help vulnerable groups.
   
• The cost-of-living deduction
  The cost-of-living deduction is considered to be a one-off negative-tax deduction and serves to provide relief to persons obligated to pay income tax. Specifically, all families with children and all employees who only have to pay a small amount of income tax due to their income will benefit from this deduction.
   
• Increase of the commuter allowance and quadrupling of the Pendlereuro (commuter deduction)
  Whoever was entitled to the basic or comprehensive commuter allowance also received the Pendlereuro (commuter deduction), which is automatically deducted from taxes. To date, this amounted to €2 annually per kilometer of basic distance between one's apartment and place of work. This amount will now be increased from €2 to €8 per kilometer commuted. This measure will first take effect by June 2023. The commuter's allowance will be increased by 50 % for a limited time. This measure has already been in effect since May 2022 and until June 2023. All information collected regarding the commuter discount and the commuter allowance can be viewed here.

HOW DO YOU SAVE ON ENERGY AND HEATING?

• The electricity price cap
  The electricity price cap will take effect for approximately 80 per cent of the average consumption of a household and will significantly dampen the increase in costs. The market price must be paid for consumption exceeding 2900 kWh. This also serves as an incentive to save electricity. On average, this will take a burden in the amount of 500 Euro per year off households. The Federal Government will provide approximately 3 – 4 billion Euro for this measure. The electricity price cap will presumably take effect directly on the electricity bills as of December 1st and will apply until 30 June 2024.
   
• Energy cost equalization
  Energy cost equalization comes in the form of a 150 Euro energy cost voucher. Single-person households may not earn a gross amount of more than 5,670 Euro per month. In the event of a household of multiple persons, the limit on income amounts to 11,340 gross per month. Recipients must have a contract in their name with an electricity supplier.
   
• The network cost allowance
  In addition to energy cost equalization, there is further relief for the 300,000 persons in Austria who are exempt from broadcasting fees (GIS) another form of relief. They will receive a discount of up to 75 % of network costs, that is, a maximum of 200 Euro.

ASSISTANCE FOR COMPANIES

• Reduction of the electricity and natural gas levy
  To mitigate high energy costs, the Federal Government already reduced the natural gas and electricity levy in May of 2022 to the European minimum taxation level. The natural gas levy now amounts to 1.2 cents per cubic meter (instead of 6.6 cents), the electricity levy at 0.1 cents per kilowatt hour instead of the 1.5 cents to date.
   
• Cost-of-living bonus for employees
  In 2022 and 2023, employers have the possibility of paying each employee a cost-of-living allowance of 3,000 Euro as a one-off payment. For employees, the amount is tax and contribution-exempt; it can also be paid out to marginally employed persons.

ESPECIALLY FOR CARINTHIANS

• The Carinthian bonus
  Every single person or single parent residing in Carinthia who is a citizen of Austria
  and/or is eligible for asylum and whose net monthly income is 1,328 Euro or less may apply for the Carinthian bonus. Couples with a monthly income 1,992 Euro or less are also eligible to apply for it. The income threshold increases by a net amount of 400 Euro for each additional member of the household.
   
• Heating cost assistance (HCA)
  The state of Carinthia will also be granting heating cost assistance in 2022; comprehensive and basic heating cost assistance are available. Comprehensive heating cost assistance in the amount of 180 Euro is available for single persons and single parents as well as single retirees with a net income of up to 1,100 Euro monthly. A net income threshold of 1,560 Euro applies to households of two persons (married couples, life partners, parent with a mature child). The basic heating cost assistance in the amount of 110 Euro is available to all single parents or single persons with a net income of up to 1,250 Euro monthly and households with a combined net income of up to 1,730 Euro monthly. The applications can be submitted immediately and by 28 April 2023 to the respectively responsible municipal office.
   
• Support for commuters
  All employed persons whose primary place of residence is in Carinthia and who drive at least five kilometers in the direction of their workplace and who commute at least four times per week will be paid a trip cost allowance in connection with the “Sonderförderung 2022' (2022 Special Assistance). The amounts paid out will be increased by 50 %. You can access the online application here. There is also relief for commuters who use public transportation in the form of the advance of the travel cost allowance. Ticket prices are refunded up to an amount of 100 % depending on their income and length of the commute. 
   

In this overview of the measures to counteract inflation of the Federal Government and the federal state, you will surely find some benefits or relief to help put money back in your pocket at the end of the day.