Families across Austria are set to face new financial pressures in 2027 as the government’s double budget for 2027 and 2028 introduces changes to family benefits and tax relief. While some payments will remain in place, the lack of inflation adjustments means many families could gradually lose purchasing power as everyday costs continue to rise.
Family allowance and childcare benefits are expected to remain unchanged until 2028, meaning they will not be adjusted for inflation for a third consecutive year. For families already dealing with higher prices for food, housing and other daily expenses, the freeze could make household budgets increasingly difficult to manage. The effects may continue even after benefits are adjusted again, as future increases would start from a lower base.
The Family Bonus Plus will also change. Until a child turns four, one parent can continue to claim up to €2,000 a year in tax relief. After the child’s fourth birthday, however, the benefit must generally be divided between both eligible parents. Single parents are exempt from the new rule. The change could reduce the tax advantage for single-earner and larger families.
For some taxpayers, the impact will be felt immediately. Parents who receive the bonus through their employer each month could see their take-home pay fall from January 2027. Those who claim it later through their annual tax return may not notice the reduction until 2028.
The Family Burden Equalisation Fund (FLAF), which finances benefits such as family allowance, childcare payments, school books and free student transport, is also expected to receive less money. Planned reductions in payroll-related costs could cut its revenue from around €7 billion to about €5 billion. How the resulting funding gap will be covered remains unclear.
Taken together, the measures could put additional pressure on family budgets. With benefits frozen while prices rise, families may find that the same amount of support simply does not stretch as far as before.
