Friedrich Merz’s cabinet is set to push through one of the most important tax “reforms” of the black-red coalition. The draft bill by Finance Minister Lars Klingbeil provides for relief of around 10 billion euros, with the main beneficiaries being families as well as citizens with low and middle incomes. A family with two children in which both parents earn 2,800 euros gross per month each is expected to save about 632 euros in taxes per year from 2028.
The relief is to be funded, among other things, by wealthier citizens: the increased top-income tax is to apply at a lower income level than before. However, there is no agreement within the coalition—part of the CDU/CSU rejects individual elements of the draft. Nevertheless, the government wants to bring the draft bill through the cabinet today and initiate the parliamentary process.
632 euros per year is about 53 euros per month. Against the backdrop of food, rent, and heating prices, that doesn’t sound as impressive as “more than six hundred euros in tax relief” at the press conference.
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