A fresh dispute has broken out in Austria’s governing coalition over a proposal to lower the threshold for the 55 percent top income-tax rate from one million to 500,000 euros and make it permanent, according to documents seen by the APA news agency. The plan, which comes from the SPÖ-led finance ministry, is meant to help finance an increase in the child supplement (“Kindermehrbetrag”) from 700 to 1,000 euros per child per year, starting in 2027.
Under the draft law, the changes would be written into the Income Tax Act rather than the Social Welfare Principles Act, shifting the 55 percent marginal rate so that it applies to taxable income above 500,000 euros instead of above one million. The new 500,000-euro limit would not be adjusted for inflation. The higher child supplement is aimed at parents whose earnings are so low that the “Familienbonus Plus” tax credit cannot be fully used; officials say families in lower income brackets are hit hardest by rising costs for housing, energy, food, childcare and education.
The proposal has triggered immediate pushback from the conservative ÖVP. Party general secretary Markus Gstöttner argued that social-welfare reform should not be funded through “new taxes,” pointing to Austria’s high level of state spending and overall tax burden. He insisted the core of the reform is a fairness rule: people who have never paid into the system should not receive full benefits from day one, and linking the package to tax hikes misses that logic.
Supporters counter that the measure is a targeted way to protect vulnerable households while keeping the budget balanced, placing more of the load on very high earners. Critics warn it could deepen the coalition rift and fuel debate over whether Austria, already with a large public sector and heavy deductions from pay, should be raising taxes on top incomes at all.
