Austria’s government has announced a new package of economic measures that will impact life in the country from taxes to jobs and rent hikes.
Austria’s turquoise-red-pink (ÖVP-SPÖ-NEOS) government set out a new package to lift growth, rein in inflation and cut red tape after a two-day retreat, aiming for what leaders call the 2-1-0 formula – inflation at or below 2 percent, growth at or above 1 percent and zero tolerance for extremists, as reported by Kurier.
The plan comes amid weak momentum: the economy grew only marginally year on year in the second quarter, and inflation stood at 4.1 percent in August, among the highest in the EU.
The government says it will mobilise €1 billion to help push growth to at least 1 percent, while targeting a swift slowdown in price rises across food, energy and housing.
“The recovery is not a sprint, the recovery is a marathon,” Economy Minister Wolfgang Hattmannsdorfer said, adding that the measures are designed for steady improvement rather than a quick fix, according to Kurier.
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Investment, jobs and digital upgrades
The centrepiece is a temporary boost to the so-called “investment allowance”, a government-backed incentive for industries and companies.
In November and December 2025 and throughout 2026, the standard allowance doubles from 10 to 20 percent, with eco-investments rising from 15 to 22 percent. Claims are capped at €1 million in eligible costs per company and the measure is expected to cost €220 million in total.
For energy-intensive manufacturers, an industrial electricity bonus is slated for 2025 and 2026 at €75 million per year, with the bill heading to consultation before a quick vote in parliament.
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On connectivity, the government plans to invest €40 million per year between 2027 and 2029 in broadband expansion to speed up digital communications nationwide. And on skills, the labour-market push focuses on upskilling, apprenticeships and re-training, with the “55 Plus” programme for older workers and the long-term unemployed set to receive €50 million annually from 2026.
A “flat tax” concept for pensioners who work alongside their pension is on the table for the autumn, but details still need to be agreed.
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What will change on prices: food, energy and rents
Food prices are a priority for the government.
The government wants EU-level action against an “Austria surcharge” that sees identical branded goods priced around 8 percent higher than in Germany, while building an “Alliance for fair food prices” with retailers to deliver measures by year’s end.
New rules would require shrinkflation – the practice of charging the same amount for a smaller product quantity – to be labelled, and there would be tougher checks on misleading discounts. The consumer association VKI has already sued four major chains, and the Federal Competition Authority (BWB) is to draw up an options catalogue and launch broader competition monitoring.
In energy, planned reforms of the Electricity Industry Act introduce a crisis mechanism so that utilities pass through not only price increases but also decreases to households, with regulator E-Control overseeing compliance. The renewable energy surcharge is set to be lowered for households and businesses from January 1st 2026.
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Housing is another big lever. From 2026, the government wants a rent brake to cover private tenancies as well as regulated ones. If inflation tops 3 percent, rents would only be allowed to rise by half of the inflation above that threshold. The model is due to go quickly into consultation.
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Fees and red tape
Federal fees are set to rise by no more than 2 percent next year, and ministries plan to cut reporting burdens, accelerate permitting and build a nationwide energy-performance certificate database to simplify procedures. For people in Austria, that should mean fewer administrative hoops and more predictable costs on common transactions.
How is this all paid for?
The fiscal backdrop is tight. The government needs to save roughly €15 billion across 2025 and 2026, and additional consolidation may be necessary to stay on the EU’s path.
Revenues in the first seven months were somewhat better than expected while spending ran hotter, and the second half of the year – when most measures fully kick in – will be decisive.
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What happens to those who live in Austria?
If you run a business, the boosted investment allowance in late 2025 and through 2026 could make upgrades or green purchases more attractive, though claims are capped at €1 million per firm.
Manufacturers may benefit from the electricity bonus, and start-ups could see more growth capita.
If you are a consumer, expect clearer labelling on shrinking pack sizes, closer scrutiny of discounts and competition, and an energy mechanism designed to push lower wholesale prices through to bills.
If you rent, a broader rent brake from 2026 would limit large annual jumps when inflation is high. And if you are an older worker, watch for the “55 Plus” funding and any tax tweaks that make working in retirement easier.
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