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By 2026: Lindner plans tax relief of 23 billion euros

By 2026: Lindner plans tax relief of 23 billion euros

Finance Minister Lindner wants to combat bracket creep and plans to relieve taxpayers of 23 billion euros in the next few years.

Finance Minister Christian Lindner wants to offset the effects of high inflation and relieve taxpayers of 23 billion euros in the next few years. The plan is to adjust wage and income tax in three steps by 2026, the FDP leader said on Wednesday in Berlin. Lindner wants to use this to offset the so-called cold progression, a kind of creeping tax increase when a salary increase is completely eaten up by inflation but still leads to higher taxes. The “Bild” newspaper was the first to report on the plans.

Despite the high costs, Lindner does not see the ongoing budget discussions at risk “if the coalition strengthens economic growth through bold impulses,” according to government sources. The federal government’s share has already been taken into account in the financial planning. An update is planned for the autumn, when a new progress report is presented. There is currently a funding gap of around 25 billion euros in the budget plans for the coming year.

According to Lindner’s plans, the basic allowance for wage and income tax is to increase this year by 180 euros to 11,784 euros, retroactively to January 1. No tax is payable up to this income. According to the information, this will save taxpayers two billion euros.

Basic allowance to increase

From January 2025, the basic allowance is to increase by a further 300 euros to 12,084 euros. In addition, the income tax rate is to be shifted – this means that higher tax rates will only apply to slightly higher incomes than before. Compared to current law, this means a tax relief of eight billion euros, it was said. A further increase in the basic allowance by 252 euros to 12,336 euros is planned for 2026. The tax rate is also to be shifted again. The annual tax relief will then rise to a good 13.3 billion euros.

However, Lindner’s plans have been criticized in the traffic light coalition. “Proposals that cost the federal government, states and municipalities tens of billions and primarily relieve the burden on the richest in the country are not in keeping with the times,” said the deputy Green Party parliamentary group leader Andreas Audretsch to the German Press Agency. The budget situation is extremely difficult – and the focus now must be on Ukraine and aid for the flood victims. “The damage in the flood areas will result in further costs running into billions for the federal government, states and municipalities,” warned Audretsch.

Union MP Sebastian Brehm (CSU), on the other hand, described the relief as inadequate. Lindner was only doing what he was required to do according to the Basic Law. “That is unambitious and no reason to celebrate.”

Source: Stern

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