German cabinet agrees to expand tax relief to boost economy
2024.07.24 08:13
BERLIN (Reuters) – Germany’s cabinet agreed on Wednesday to increase tax relief for companies and households to almost 21 billion euros per year to help bolster stuttering growth in Europe’s biggest economy.
The package, part of an outline 2025 budget deal agreed earlier this month, sets out plans for 20.9 billion euros ($22.7 billion) of annual tax relief, the finance ministry said. That compares to the previously planned 12.8 billion euros.
The details of the package, hammered out by Social Democrat Olaf Scholz’s awkward three-way coalition with the Greens and pro-business Free Democrats (FDP), are now being finalised.
For companies, the measures include extending until 2028 a scheme allowing firms faster depreciation of their assets, so reducing their tax burden and encouraging them to invest sooner. Tax incentives for research will also be extended.
For households, the tax-free allowance on the lowest income tax bracket will rise by 300 euros to 12,084 euros next year and increase again in 2026. Income tax brackets will be adjusted in line with inflation for 2025 and 2026, and child benefit will rise.
The plans need the approval of the upper and lower houses of parliament later this year. They will need votes from opposition conservatives in the upper house, which could be tricky.
($1 = 0.9229 euros)
