Scholz's coalition unveils tax relief, boosts family benefits
At the end of Olaf Scholz's coalition government, several important changes for citizens were enacted. Among the changes are higher tax reliefs and an increase in the Kindergeld family allowance.
"Deutsche Welle" reports that on Friday (December 20), the Bundesrat voted in favor of legislative changes beneficial for Germans. Earlier, the regulations were passed in the Bundestag.
This progress is 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 changes is to adjust the basic tax-free amount to inflation. According to the proposal, in 2025, the threshold will increase to 12,096 euros (12,615 dollars), marking an increase of 312 euros (325 dollars). Meanwhile, in 2026, the amount will reach 12,348 euros (12,880 dollars), which is 252 euros (263 dollars) higher. Furthermore, the authorities also plan to adjust the reliefs from the solidarity tax.
The tax reductions are intended to compensate for the burdens resulting from "cold progression." This refers to 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 an increase of 5 euros (5.2 dollars), the allowance will be 255 euros per month (about 265 dollars). In 2026, the allowance is expected to be 259 euros per month (about 270 dollars).
It's worth highlighting that Kindergeld is regularly increased. In 2010, the allowance was 180 euros per month (about 199 dollars at the current exchange rate).
The tax-free amount for having children will initially increase by 60 euros (63 dollars), followed by another 156 euros (163 dollars). The child supplement for low-income families eligible for social benefits will increase by 5 euros (5.2 dollars) in 2025. This will be a one-time increase.
During a speech in the Bundesrat, German Finance Minister Jörg Kukies (SPD) emphasized that only through tax reductions will citizens notice an improvement in their finances.
Furthermore, financial security for the nationwide ticket (known as the Deutschlandticket) in public transport for 2025 was approved. The nationwide ticket is expected to cost 58 euros per month next year (about 60.5 dollars). Currently, 13 million people use it, but a decision has not yet been made on whether it will continue in 2026.
Germany pays hundreds of millions in benefits
Recently, "Bild" reported that substantial amounts of money are being channeled to accounts outside Germany as benefits. In 2023, this amounted to 525.7 million euros (550 million dollars).
In the first half of 2024, the total was 250 million euros, of which 111 million euros (115 million dollars).
