Austria’s far-right Freedom Party (FPÖ) and the conservative Austrian People’s Party (ÖVP), which look likely to form the next Austrian government as things stand, are finalising a budget plan to save €6.4 billion in 2025.
As part of their plans, the coalition has promised no “new taxes,” but critics are calling their measures “hidden taxes,” with higher fees and cuts to subsidies expected to hit residents hard.
Here’s what’s changing and how it might affect your day-to-day life.
One of the most talked-about changes is the removal of the climate bonus (Klimabonus), a subsidy introduced in 2022 to balance out the costs of the CO2 tax. Without the bonus, all that’s left is the tax itself - effectively increasing costs for everyone.
Margit Schratzenstaller, an economist at the WIFO research institute, described it as a tax hike in disguise. “If you abolish the climate bonus, what remains is the tax increase,” she told Der Standard.
The move is expected to hit low-income households the hardest since the Klimabonus gave them some relief from the CO2 tax. For many, this will mean higher heating bills and fuel costs without any compensation.
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More taxes and higher fees to watch out for
While the possible coalition insists it isn’t introducing any new taxes under the plans, adjustments to existing taxes look set to add to your expenses. Here’s what’s changing under the proposals:
- Digital tax expansion: Austria’s digital tax currently applies to online advertising. Under the new plan, it may include fees charged by platforms like Airbnb and Amazon. According to Der Standard, this could bring in €130 million a year - but companies may pass on the costs to consumers
- Electric vehicle (EV) levies: Tax exemptions for EVs, such as motor-related insurance and standard consumption taxes, are likely to be scrapped. This means higher costs for anyone buying or driving an electric car
- General service fees: While specifics haven’t been confirmed, fees for some public services could be adjusted for inflation as part of the government’s cost-cutting measures, according to ORF. This may result in small but cumulative increases in costs for everyday services
What about subsidies and benefits?
The budget plan doesn’t just focus on taxes - it’s also cutting popular subsidies and benefits.
For instance, the Bildungskarenz programme, which lets employees take paid educational leave, is set to become harder to access with stricter rules and less funding. This could make it tougher for workers - especially foreign residents trying to upskill - to take advantage of this program.
Pension adjustments are also on the table, with a suspension of account revaluation expected to hurt retirees in the long run. Renewable energy subsidies, like VAT exemptions for solar panels, are another likely target. This will make it pricier for households to switch to sustainable energy options.
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Who’s going to feel this the most?
These changes are likely to hit low - and middle-income households hardest. The Klimabonus, for example, was a critical relief for poorer families.
Car owners - particularly those with electric vehicles - will also feel the pinch as tax breaks disappear.
Meanwhile, renters and homeowners who want to invest in renewable energy will find it more expensive to make eco-friendly upgrades.
What about foreign residents?
For foreign residents, these cuts could be challenging.
Many rely on programmes like the Bildungskarenz to improve their job prospects or integrate into Austrian society. With reduced access to these benefits, gaining new skills or qualifications could become harder.
Rising costs could also make it more difficult to meet Austria’s income thresholds for permanent residency or citizenship, adding another layer of stress for many.
What’s next?
The FPÖ and ÖVP aim to finalise their budget by January 21st to meet EU deficit targets.
While they’ve stuck to their promise of avoiding “new taxes,” these changes will still leave many residents paying more.
Whether it’s through higher fees, new levies, or fewer subsidies, life in Austria is about to get more expensive.
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