300 to 500 euros more – cold progression: this is how abolition affects it

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For middle incomes up to 500 euros more per year: According to the Minister of Finance, abolishing two-thirds of the cold progression in the payroll tax should have an average effect.

“We have seen that it is not easy to get the money to the people,” said Treasury Secretary Magnus Brunner, explaining his experience negotiating the anti-inflation package.

The main part concerns the elimination of the cold progression, which must be permanent. The law for this must first be formulated, but the process is planned as follows: You take the inflation rate from July of the previous year to June of this year. This provides the Treasury with additional income from payroll taxes, two-thirds of which is repaid in the following year. “That yields an average of 1 to 1.6 percent more net wages,” Brunner calculates. With an average income, that would be 300 to 500 euros net per year.

Anyone who pays income tax, i.e. has more than 11,000 euros in taxable annual income, will benefit from this. Those who earn less were already relieved in other ways. The remaining third of the additional income from the cold progression is distributed by the government. For example, B. further increases in social benefits are possible, which are decided separately in each case.

The climate bonus including anti-inflation surcharge (500 euros) will be available this autumn in October. In addition, the traffic deduction for low incomes will increase, spread by 500 euros. Employees benefit from this in the 2022 employee tax assessment, i.e. 2023.

There is money for retirees in September
Retirees could receive this money as early as September, according to Brunner. The PVA is working on an earlier payout. Also from the autumn – keyword for upcoming wage negotiations – companies may pay employees up to 3000 euros as a tax-free bonus. This measure is initially limited to two years.

Source: Krone

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