Tax Work Bonus Increases: What Does This Mean for Your Employees?
October 2026 - Working should pay off more. Based on that principle, the federal government is strengthening the tax work bonus. The measure takes effect starting with the 2027 tax year and therefore already applies to income earned in 2026. As a result, lower-wage employees in particular should have more take-home pay. But what exactly is this tax work bonus? And do you, as an employer, need to take any action?
Employees with relatively low wages can already benefit from the social work bonus today. Despite its name, this is not a bonus paid on top of wages. Rather, it is a reduction in personal social security contributions. As a result, employees keep more of their gross wages as take-home pay. As wages rise, the benefit gradually decreases. In addition, there is also a tax work bonus. This provides an additional tax reduction for employees who are eligible for the social work bonus.
What’s changing?
The Act of July 15, 2026, on personal income tax reform strengthens the tax work bonus. To calculate the benefit, a specific percentage is applied to the social work bonus. The final amount is then capped at an annual maximum.
Starting with the 2027 tax year, both the applicable percentages and the maximum amount subject to indexation will be increased. For certain components, a further increase will take effect starting with the 2029 tax year. The goal is clear: to increase the incentive to work, with a particular focus on lower-wage workers.
More Take-Home Pay Without a Higher Gross Salary
For employees, the result is particularly appealing. Thanks to the higher tax work bonus, they can keep more take-home pay without their gross salary having to increase.
For employers, there is an important distinction: the tax work bonus is not an extra-legal benefit that you can grant to your employees on your own. It is a statutory tax benefit. Therefore, you cannot decide to give an employee “more work bonus” in the same way that you might grant meal vouchers or a bonus, for example.
Furthermore, the size of the final benefit varies from employee to employee. It depends, among other things, on the employee’s salary and the social work bonus to which they are entitled.
