As at the start of every year income tax brackets will be modified to take account of inflation. This means that take home pay for those in work and the amount a pensioner receives in pension after tax will rise by around 10 euro/month from January 2020. This figure was calculated by the HR service provider SD Worx.
In the years since 2015 the Federal Government’s tax shift has meant that been greater than it would otherwise have been if the tax brackets had only been modified to take account of inflation. However, the tax shift is now behind us so the increase in tack home pay from the start of 2020 will be more modest than would otherwise have been the case. The index-linked modifications to the tax brackets also means that net pensions will increase by 10 euro/month from 1 January 2020.
Wage increase for white collar staff
Around 470,000 white collar staff will also see their gross earnings increase by 0.8% (an increase of 24 euro/month for those currently on 3,000 euro/month). The increase is to help the salaries paid to this group of white collar keep up with inflation.
Index-linked increase for public sector workers, pensioners and those on benefits
The Federal Planning Bureau predicts that the point at which price exceeds the level at which pensions, public sector salaries and benefits must be increased by 2% will be exceeded in February. This means that pensions and benefits will rise by 2% in March with public sector salaries increasing by 2% in April.
From 1 January 2020 the payments given to those taking parental leave, leave to offer medical assistance and leave to offer palliative care will increase by 4.5% for single people that take the leave to care for their child.