Budget Accompanying Act 2027/28: Key Payroll Measures

1. Unemployment Insurance Contributions for Low-Income Earners

The reduction of unemployment insurance contributions (ALV) for low-income earners will be abolished for all new employments commencing on or after 1 January 2027. Consequently, instead of employee contribution rates of 0%, 1% or 2%, the standard employee contribution rate of 2.95% will apply.

For employment relationships that commenced before 1 January 2027, a multi-year transitional regime will apply:

2. Unemployment Insurance Contributions and IEF Surcharge for Older Employees

As of 1 January 2027, the general exemption from unemployment insurance contributions for individuals aged 63 and over will be abolished. Employers will therefore be required to continue paying the employer’s unemployment insurance contribution until the employee meets the statutory requirements for retirement.

Accordingly, the exemption from the Insolvency Entgelt Fund (IEF) surcharge for employees aged 63 and over will also be abolished as of 1 January 2027.

Please note: Several other measures that have been widely discussed in recent weeks are now expected not to be implemented. Based on current information, both the proposed reintroduction of the termination levy (Auflösungsabgabe) and the planned waiting period for unemployment benefits in cases of mutual termination have been removed from the political agenda.

3. Maximum Social Security Contribution Base

The maximum social security contribution base (Höchstbeitragsgrundlage) will be increased on an extraordinary basis as follows:

• 2027: additional increase of EUR 150.00 per month (EUR 5.00 per day)
• 2028: additional increase of EUR 50.00 per month (EUR 1.67 per day)

4. Teleworking Allowance to Be Abolished

The exemption from payroll taxes and social security contributions for teleworking allowances, as well as their tax deductibility, will be abolished with effect from 1 January 2027.

5. Family Bonus Plus – New Allocation Rules

The allocation of the Family Bonus Plus (Familienbonus Plus) between eligible claimants (recipient of family allowance, partner and/or maintenance payer) will be restricted from 1 January 2027 as follows:

Where there is no dependent child under the age of four living in the same household and no child entitled to increased family allowance, it will no longer be possible for a single claimant to claim the entire Family Bonus Plus.

From the month following the child’s fourth birthday (provided no increased family allowance is granted), the Family Bonus Plus may generally only be allocated between eligible claimants according to one of the following ratios:

• 75% : 25%, or
• 50% : 50%

This amendment is intended to strengthen employment incentives in a targeted manner.

Additional Note

To implement the revised allocation rules for the Family Bonus Plus, the tax authorities will likely need to redesign Form E30.

As a result, payroll departments can expect an increased administrative workload at the beginning of 2027.

6. Taxable Benefit-in-Kind for Company Electric Vehicles from 2027

A draft amendment to the Benefits-in-Kind Valuation Regulation (Sachbezugswerteverordnung) provides for the previously announced abolition of the exemption from taxable benefits in kind for privately used company electric vehicles.

The monthly taxable benefit in kind will amount to:

• 0.375% of the acquisition cost in 2027 (capped at EUR 180.00 per month); and
• 0.625% of the acquisition cost from 2028 onwards (capped at EUR 300.00 per month).

Additional Note

According to the draft regulation, the taxable benefit-in-kind rules for electric vehicles will apply to payroll periods ending after 31 December 2026.

Consequently, from 1 January 2027, the new rules will apply not only to newly registered vehicles or vehicles newly provided to employees, but also to electric vehicles that were already available to employees before that date.

7. Freeze on Family, Social Security and Health Insurance Benefits

The annual indexation of the following benefits will continue to be suspended in 2028:

• Family allowance (Familienbeihilfe)
• Childcare allowance (Kinderbetreuungsgeld)
• Family Time Bonus (Familienzeitbonus)
• Sickness benefit (Krankengeld)
• Rehabilitation benefit (Rehabilitationsgeld)
• Reintegration benefit (Wiedereingliederungsgeld)

8. Employer Contribution to the Family Burdens Equalisation Fund (FLAF)

The employer contribution (Dienstgeberbeitrag – DB) to the Family Burdens Equalisation Fund (FLAF) will be reduced from 3.7% to 2.7% as of 1 January 2028.

The exemption from the employer contribution for employees aged 60 and over will be abolished with effect from 1 January 2028.

Link to the Government Bill for the Budget Accompanying Act 2027–2028

Government Bill – Budget Accompanying Act 2027–2028