As of: March 30, 2024, 5:35 a.m
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Christian Lindner (FDP), Federal Minister of Finance, sits on the government bench in the Bundestag. He is aiming for a retroactive increase in the basic allowance for wage and income tax. © Ann-Marie Utz/dpa
The federal government keeps talking about relief for the economy. But many citizens can still expect something this year - at least if Finance Minister Lindner has his way.
Berlin - Finance Minister Christian Lindner wants to provide tax relief for millions of citizens this year. Due to the high inflation expectations on January 1st, the citizens' allowance was increased "massively and disproportionately". This must now also retroactively lead to an increase in the basic allowance for wage and income tax, the FDP leader told the German Press Agency. “We are preparing this in the legislation. This means that there will also be further tax relief for the working population this year.”
Lindner also promised changes to income tax for 2025 and 2026. Then the so-called cold progression must be balanced out again, he said. This refers to the effect of high inflation on income tax, which would ultimately lead to a secret tax increase. “If we did nothing, then people who get a salary increase that barely compensates for inflation would face a greater tax burden,” explained the finance minister.
Budget deliberations for 2025
The federal government most recently responded to high inflation for the years 2023 and 2024. Further compensation must be discussed in the context of the budget draft and financial planning, Lindner announced. Financial details will only be known in the fall, when a new progress report is available. As a rule, to compensate for the cold progression, several adjustment screws in the tax tariff are adjusted: the basic tax allowance, i.e. the income up to which no tax has to be paid, and also the limit above which the top tax rate of 42 percent is due.
Budget discussions for 2025 are currently underway in the federal government. Financial leeway is tight: even without tax relief, there is already a gap in the double-digit billions that needs to be closed. dpa