Scholz's coalition ends with tax reliefs and benefit boosts
At the end of Olaf Scholz's coalition government, several significant changes for citizens were implemented. Among these changes are higher tax reliefs and an increase in the Kindergeld family allowance.
"Deutsche Welle" reports that on Friday, 20th December, the Bundesrat voted in favour of legislative changes beneficial for Germans. Earlier, the regulations were approved in the Bundestag.
This is all thanks to an agreement that the SPD and the Greens made with the FDP (a party that left Olaf Scholz's coalition in November 2024). This gives the green light to implement regulations planned for the next two years.
Higher tax reliefs in Germany. Here are the amounts
One of the modifications is to adjust the basic tax-free amount to inflation. According to the proposal, in 2025, the threshold will increase to €12,096 (£10,040), representing an increase of €312 (£260). Meanwhile, in 2026, the amount will reach €12,348 (£10,250), which is €252 (£210) higher. Furthermore, the authorities aim to adjust the reliefs from the solidarity tax.
The tax reductions are intended to compensate for the burdens resulting from "cold progression." This involves higher tax rates for employees, even though the increase in their income is fully or partially offset by inflation, reports "DW."
Kindergeld increase, nationwide ticket extended
Additionally, in 2025, the Kindergeld family allowance will also increase. After a rise of €5 (£4), the allowance will be €255 (£210) per month. In 2026, the allowance is expected to be €259 (£215) per month.
It is worth noting in this context that Kindergeld is regularly increased. In 2010, the allowance was €180 (£150) per month.
The tax-free amount for having children will initially increase by €60 (£50), followed by another €156 (£130). The child supplement for low-income families eligible for social benefits will increase by €5 (£4) in 2025. This will be a one-time increase.
During a speech in the Bundesrat, German Finance Minister Jörg Kukies (SPD) emphasised that only through tax reductions will citizens notice an improvement in their finances.
Additionally, financial support for the nationwide ticket (known as the Deutschlandticket) for public transport in 2025 was approved. The nationwide ticket is expected to cost €58 (£48) per month next year. Currently, 13 million people use it, but a decision has not yet been made on whether it will be maintained in 2026.
Germany pays hundreds of millions in benefits
Recently, "Bild" reported that substantial amounts of money are also being funnelled to accounts outside Germany as benefits. In 2023, this amount was €525.7 (£436.5) million.
Meanwhile, in the first half of 2024, it was €250 (£210) million.
