Tax plans: Reports: Despite relief, less net of gross in 2025

Despite the planned tax relief, many households will likely have less money available in the new year, according to media reports. Above all, rising social security contributions meant that many citizens would then have less net of their gross income, reported “Welt am Sonntag”, citing calculations by the German Economic Institute (IW). The planned tax relief was not enough to offset the negative effects. “Bild” reported something similar, citing figures from the Taxpayers’ Association.

For a single with an average income of 50,000 euros gross per year, according to “Welt am Sonntag”, the additional burden would only be reduced from 233 euros to 38 euros net per year. Even for single parents, increases in child benefit and changes in income tax rates are often not enough to turn a minus into a plus. Depending on their income level, only couples with children who file jointly can enjoy more net income.

Before the new elections, a law to compensate for the cold progression in income tax and to increase child benefit is to be passed in the Bundestag. The FDP wants to agree to this together with the minority coalition of the SPD and the Greens. In the Federal Council, however, the consent of the Union-led states is also required so that it can come into force.

The law is intended to prevent a creeping tax increase in January and to offset the negative effect of inflation on income tax. To achieve this, several key parameters in the tax rate should be shifted. In addition, child benefit is to increase by five euros to 255 euros from the beginning of the year. The child allowance and the immediate child allowance for low-income families are also increasing. At the same time, contributions for pension, health and nursing care insurance will also be increased. Higher CO2 prices also make refueling and heating more expensive.