Austria's Secret Advantage: The 13th & 14th Month Salary

Austria shares many similarities with neighboring Germany: the same language, similar tax brackets, comparable social insurance structures. But Austria has one significant advantage that meaningfully increases take-home pay for employees: the 13th and 14th month salary payments, known as Sonderzahlungen, which are taxed at a flat 6% instead of the regular progressive income tax rates.

This means that Austrian employees effectively receive two extra monthly salaries per year that are barely taxed. For a worker earning 50,000 EUR, this tax advantage translates to approximately 1,500-2,500 EUR more in annual take-home pay compared to what they would receive if all income were taxed at regular progressive rates.

This guide explains how the system works and why it makes Austria an attractive option, particularly for workers comparing opportunities between Austria and Germany. Calculate your Austrian salary with our Austria calculator.

In Austria, most collective bargaining agreements (Kollektivverträge) require employers to pay employees a 13th salary in June (Urlaubsgeld, holiday bonus) and a 14th salary in December (Weihnachtsgeld, Christmas bonus). These are not optional bonuses; they are legally mandated by collective agreements covering over 95% of Austrian employees.

How it works financially: A gross annual salary of 50,000 EUR is typically structured as 14 payments. The "monthly" salary is 50,000 / 14 ≈ 3,571 EUR. Twelve of these payments are your regular monthly salary, and two are the special payments (Sonderzahlungen).

The tax advantage: The two special payments (totaling approximately 7,143 EUR in this example) are taxed at a flat rate of 6%, plus social insurance contributions. The regular 12 monthly payments are taxed at the normal progressive rates (20% to 55%).

The math: On the 7,143 EUR in special payments, the income tax is only 429 EUR (6%). If this same income were taxed at regular progressive rates, the tax would be approximately 2,400-3,000 EUR depending on your overall income level. The saving is approximately 2,000-2,500 EUR per year.

Important: There is a tax-free allowance of 620 EUR per year on the special payments, meaning the first 620 EUR of Sonderzahlungen is completely tax-free. This further reduces the effective tax rate on these payments.

See how this affects your specific salary with our Austria calculator.

Austria and Germany are frequently compared because of their shared language and similar economies. Here is how the tax systems differ in practice:

Income tax brackets: Austria's brackets are slightly different from Germany's: - Up to 12,816 EUR: 0% - 12,817 to 20,818 EUR: 20% - 20,819 to 34,513 EUR: 30% - 34,514 to 66,612 EUR: 40% - 66,613 to 99,266 EUR: 48% - 99,267 to 1,000,000 EUR: 50% - Above 1,000,000 EUR: 55%

Germany's rates range from 14% to 45%, with a smoother progressive curve. Austria's rates are slightly higher in the middle brackets but offer the massive 13th/14th month advantage.

Social insurance: Austrian employees pay approximately 18.12% in social insurance (health 3.87%, pension 10.25%, unemployment 3%, housing contribution 0.5%, and other minor contributions). German employees pay approximately 20% (health ~8.15%, pension 9.3%, unemployment 1.3%, care ~2.0%). Austria's social insurance rate is slightly lower.

Net salary comparison at 50,000 EUR: At this salary level, an Austrian employee typically takes home approximately 1,000-1,500 EUR more per year than a German employee, primarily due to the 13th/14th month tax advantage. The difference grows at higher salaries.

Family benefits: Austria's Familienbonus Plus provides a tax credit of 2,000 EUR per child per year (up to age 18), which is directly deducted from income tax. Germany provides Kindergeld of 250 EUR per month per child (3,000 EUR per year), which is a direct payment rather than a tax credit. For families, both systems are generous but work differently.

Compare the two countries at any salary level using our Austria calculator and Germany calculator.

Austria's social insurance system, administered by the Österreichische Gesundheitskasse (ÖGK) for most employees, covers health, pension, unemployment, and workplace accident insurance. Here is how the employee contributions break down:

Health insurance (Krankenversicherung): 3.87% of gross salary. This provides full coverage including doctor visits, hospital care, prescription drugs, and dental care. Austrian health insurance also covers dependents (spouse and children) without additional cost.

Pension insurance (Pensionsversicherung): 10.25% of gross salary. Austria's state pension is notably generous, replacing approximately 80% of average lifetime earnings for a full contribution career (45 years), one of the highest replacement rates in Europe. By comparison, Germany's state pension replaces approximately 45-50%.

Unemployment insurance (Arbeitslosenversicherung): 3% of gross salary. Unemployment benefits in Austria replace approximately 55% of previous net income and are available for 20 to 52 weeks depending on age and contribution history.

Other contributions: Housing promotion contribution (Wohnbauförderungsbeitrag) at 0.5%, plus small amounts for the employee provident fund (Mitarbeitervorsorgekasse) at 1.53% (employer-paid).

Contribution ceilings: Social insurance contributions are capped at a monthly gross salary of approximately 6,060 EUR (72,720 EUR annually). Income above this ceiling is not subject to social insurance contributions, which benefits higher earners.

Practical example at 50,000 EUR: Employee social insurance contributions total approximately 9,060 EUR per year (18.12%). Combined with income tax (reduced by the 13th/14th month advantage), the effective total deduction rate is approximately 35-37%. Calculate the exact figures at our Austria calculator.

Tax return (Arbeitnehmerveranlagung): Austrian employees can file an annual tax return to claim additional deductions. Unlike Germany, filing is optional for most employees, but it is often worthwhile. Common deductions include commuting costs (Pendlerpauschale, more generous than Germany's for longer distances), work-related expenses (Werbungskosten), childcare costs, donations to qualifying organizations, and church tax.

Commuter allowance (Pendlerpauschale): Austria offers a generous commuting deduction based on distance from home to work and whether public transport is available. The allowance ranges from 696 EUR to 3,672 EUR per year depending on distance, and it is significantly more generous than Germany's per-kilometer deduction for workers commuting longer distances.

Familienbonus Plus: If you have children, ensure your employer applies the Familienbonus Plus (2,000 EUR per child under 18, 650 EUR for children 18+ in education) in your monthly payroll. This is a tax credit, meaning it directly reduces your income tax by this amount. For a family with two children, this is a 4,000 EUR annual tax reduction.

Cross-border commuting: If you live in Germany or another neighboring country and work in Austria, special bilateral tax agreements determine where you pay taxes. Generally, employment income is taxed in the country where you work. Seek advice from a tax advisor (Steuerberater) if you are in this situation.

Cost of living: Vienna is consistently ranked as one of the most livable cities in the world. While rents have increased, they remain significantly lower than Munich, Zurich, or Paris. A one-bedroom apartment in central Vienna costs approximately 900-1,200 EUR per month. Outside Vienna, cities like Graz, Linz, and Salzburg offer even more affordable living.

Church tax (Kirchenbeitrag): Unlike Germany where church tax is deducted by the employer, Austrian church tax is billed directly by the religious community. The rate is approximately 1.1% of gross income. This amount is tax-deductible (up to 600 EUR per year). If you leave the church, inform your religious community directly.

For a complete breakdown of your Austrian take-home pay, use our Austria calculator.