Lowering the Tax Rate for the Lowest Income Tax Bracket in Austria. Impact on Tax Burden, Tax Revenues and Disposable Income of Private Households

The present ex-ante evaluation of the reduction in the marginal tax rate for the lowest income tax bracket from 25 percent to 20 percent shows that the reform will provide slight relief to broad sections of the population. The extent of the absolute individual relief increases with taxable income and is capped at 350 € per year. The relative growth in equivalised disposable household income averages 0.8 percent. For the 4.63 million directly affected taxpayers, the relative growth amounts to 1.0 percent on average. The reform is accompanied by a reduction of wage and income tax revenues by 1.46 billion €. 13.9 percent of this relief volume benefits the third of the population with the lowest equivalised disposable income, 50.1 percent goes to the upper third.