Factsheet for measure
DE-2023-1/3054
– measures in Germany
Tax adjustments
Steuererleichterungen
Background information
Due to the rising inflation resulting from the ongoing Russian war in Ukraine, the federal government has adopted three relief packages during 2022. The first two relief packages stem from the first half of 2022. The third package from autumn 2022. All three packages are worth €95 billion. In addition, the federal government created a fund worth €200 billion to cushion the rising energy prices. Against this background, the federal government has also decided to use some additional measures to help fight the rising inflation and compensate for rising prices.
Content of measure
The federal government decided to reduce tax burdens for certain target groups by linking the tax rates to the inflationary price trends. The goal is to at least partially compensate the high inflation rates by easing tax burdens in certain cases. To this end, the income tax rate, the basic tax-free allowance as well as the tax-free allowance for children will be adjusted in 2023 and 2024. Taxable citizens, self-employed persons, pensioners and entrepreneurs can profit from the changes in taxation. However, persons with very high incomes (i.e. those paying 45% tax on their income) are exempt from the new regulations.
Use of measure
No data yet. However, the federal government estimates that some 48 million citizens will profit from the tax adjustments.
Target groups
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Workers
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Businesses
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Citizens
|
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Applies to all workers
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Does not apply to businesses
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Applies to all citizens
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Actors and funding
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Actors
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Funding
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National government
Local / regional government
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National funds
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Social partners
Social partners' role in
designing the measure
and form of involvement:
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Trade unions
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Employers' organisations
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Role
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Consulted
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Consulted
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Form
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Direct consultation outside a formal body
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Direct consultation outside a formal body
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Social partners' role in the
implementation, monitoring and assessment phase:
-
No involvement
-
Main level of involvement: Peak or cross-sectoral level
Involvement
Social partners were consulted during the parliamentary hearing of the so-called Inflation Compensation Act detailing all the measures mentioned in this entry.
Views and reactions
The Confederation of German Trade Unions (DGB) judged measures such as adjusting income tax and the tax-free allowance for children in certain cases as not reaching far enough - especially with regard to low-income households.
Sources
