The Federal Cabinet has decided on a series of tax changes and an increase in child allowances. Finance Minister Christian Lindner's second annual tax law will abolish tax classes III and V for married couples, ensuring that each spouse is taxed based on their individual income.
The income tax rates will also be adjusted in two steps in 2025 and 2026 to account for inflation. This also applies to the tax child allowances.
Additionally, the child allowance will increase by five euros to 255 euros per month from January 1, 2025. These changes require approval from the Bundestag and the Bundesrat. The measures also include the simplification of depreciation options and adjustments to the threshold for the solidarity surcharge.
The FDP emphasizes that tax policy will not be based on hostility towards achievement or envy. Overall, individuals and businesses are expected to be relieved of a total of 30 billion euros.
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