Korosec Urges Government to Uphold Commitment to 25% Flat Tax from 2026

The Austrian government is currently evaluating the implementation of a uniform flat tax rate of 25% on additional income earned by pensioners, a measure scheduled to take effect from January 1, 2026. This initiative is intended to simplify the taxation process for individuals who continue working after retirement, aligning with longstanding calls for more straightforward and equitable tax regulations.

Recent discussions have gained momentum following remarks by the State Secretary for Finance, who indicated that the government is considering multiple approaches to make post-retirement employment more appealing. The aim is to develop solutions that reduce bureaucratic obstacles and enhance the financial benefits for those choosing to remain active in the workforce beyond the standard retirement age.

The president of the Austrian Senior Citizens' Association has been a vocal advocate for making employment during retirement more accessible and less administratively burdensome. According to the association's position, the proposed flat tax offers a fair and transparent solution, ensuring a distinct separation between pension benefits and income from continued employment. This separation is expected to provide both financial and administrative relief for pensioners who supplement their income.

The organization welcomes the government's ongoing efforts to expedite the process of reaching a consensus on this issue. There is a cautious openness to equivalent alternatives, provided these models deliver comparable advantages to pensioners. Among the considered alternatives is the so-called Germany model, which has been referenced in media discussions as a possible template for reform.

Key criteria for any solution, as outlined by the Senior Citizens' Association, include increasing take-home pay, enhancing transparency, reducing bureaucratic complexity, and ensuring equal treatment for employees, self-employed individuals, and freelancers. These measures are intended to create a uniform framework that applies consistently across all occupational groups, thereby eliminating any existing disparities.

A further stipulation from the association is that any new regulation should be implemented as promised by the government, starting at the beginning of 2026. If necessary, the association suggests that retroactive application should be considered to honor prior commitments made to the public.

The final form of the policy is still under review, as the government weighs the merits of the flat tax model against alternative proposals. The outcome is expected to affect a significant segment of Austria's population, particularly those approaching or already in retirement who are interested in supplementing their pensions through continued employment.

Stakeholders and advocacy groups continue to monitor developments, urging policymakers to prioritize fairness, efficiency, and clarity in any forthcoming legislation. The dialogue underscores the broader challenges of balancing fiscal responsibility with the evolving needs of an aging workforce and the economic realities facing retirees in Austria.