Federal Finance Minister Christian Lindner (FDP) is introducing tax breaks worth billions. Now there are official numbers. The basic allowance for wage and income tax will increase by 300 euros to 12,084 euros from January 2025.

Lindner has also announced that the basic tax allowance will increase this year by 180 euros to 11,784 euros, retroactively to 1 January. No tax is due on this income. An increase of 252 euros to 12,336 euros is planned for 2026.

This will particularly benefit all taxpayers and employees who are currently not paying taxes. This should continue to be the case by increasing the basic allowance. Basically, the basic allowance is intended to ensure that people can afford certain things in life. This includes at least food, clothing, housing and emergency medical care.

By the way, married couples are entitled to double the basic allowance. It will be 24,168 euros from 1 January 2025, 24,168 euros from 2026 and 24,672 euros from 2026.

The child tax allowance will be increased by €60 to €6,672 for the 2025 assessment period and by €156 to €6,828 from the 2026 assessment period.

But! The figures for the basic allowance and the child tax allowance may still change in the autumn after the so-called progress report is submitted.

This is what most singles will have in their pockets from 2025 onwards

“People want to see results and not just press conferences,” says Reiner Holznagel, president of the German Taxpayers' Association.

The calculation concerns the adjusted basic allowance. When making the calculation, the Taxpayers' Association assumed that the tax base (zvE) also includes the additional contribution to statutory health insurance.

This is what a family of four will have from 2025

For this calculation, the taxpayers' association assumed a married couple with two children. Only one of the spouses is employed full-time.

The solidarity contribution will be reduced

To offset the additional tax burdens caused by high inflation, the tax burden of millions of people must be adjusted. To this end, the federal government is adjusting the income tax rates for 2025, as well as the basic allowance, the child allowance and the “Soli” allowance.

The term “cold progression” describes a type of progressive tax increase when, for example, a wage increase is completely eaten up by current inflation but still leads to higher taxes.

Combinations of tax classes III and V are no longer applicable

The separate tax brackets (III and V) for married couples will be abolished. Instead, there should be only one tax bracket for both spouses. So far, people with higher incomes pay taxes according to tax class III, and low-income people according to tax class V. While people with higher incomes pay less tax and therefore have more in their account, the opposite is true for people with lower incomes. After filing the tax return, the tax authorities usually return the money, depending on the amount of taxable income.

By abolishing tax brackets III and V, people with low incomes pay less tax and people with higher incomes pay more. The conclusion is that there should not be any additional burden on the couple. However, calculations show that in some cases there is an additional burden. And the state benefits from this.