WBecause of the high prices for heating, driving and in the supermarket, the federal government has launched several relief packages – some of which were approved in the Bundestag on Thursday. Specifically, it is about measures worth billions that are intended to ensure that citizens have to pay less taxes. Those who have a long commute to work benefit in particular. Finance Minister Christian Lindner (FDP) had already argued during the first debate in Parliament that the relief should dampen “perceived inflation”. Every citizen should feel that the state relieves him. This is important to prevent a dangerous wage-price spiral that could lead the entire economy into stagflation, i.e. a mix of rising prices, economic stagnation and unemployment.
However, given the high inflation, the package does not go far enough for the opposition. The Union criticized on Thursday that the basic allowance would not be raised high enough. In addition, the money will reach the citizens far too late, namely after the tax return for 2022 in the coming year. The government must act faster, especially when it comes to cold progression. This is a kind of creeping tax increase, when a salary increase is completely eaten up by inflation, but still leads to higher taxes. The following measures are included in the package that was decided on Thursday evening:
Basic allowance increases by 363 euros: The so-called basic allowance for income tax will be raised from the current EUR 9,984 to EUR 10,347. As a result, all taxpayers have to pay less income tax – retrospectively as of January 1 of this year. The basic allowance is the limit above which income tax is due in Germany in the first place. If you have an income below this amount – after all deductions such as income-related expenses – you do not have to pay any taxes. If you get over it, you will pay in future for the income from 10,348. euros taxes.
Advertising fee is increased: The flat-rate employee allowance also increases retrospectively from January 1st. This is the so-called income-related expenses flat rate, which is automatically taken into account in the tax return for all employees if they do not state higher income-related expenses themselves. So far, the taxable income could be reduced by 1000 euros, in the future it will be 1200 euros.
Long-distance commuters receive a higher commuter allowance: Anyone who has to travel further to work is particularly affected by the rise in fuel costs. That is why the increase in the lump sum for long-distance commuters, which is actually only due in two years, will be brought forward to this year. Long-distance commuters are citizens who have to travel 13 miles or more to get to work. Retroactive to January 1, they can count 38 cents per kilometer, three cents more than before. However, this should only apply until 2026.
The commuter allowance is part of the income-related expenses in the tax return. However, long-distance commuters usually get slightly more than the lump sum, so they benefit directly from the increase. The coalition emphasizes that those who have to commute less far will also be relieved by a higher flat-rate income tax allowance. However, the commuter allowance is controversial, especially among the Greens. Although it can also be credited to train or bicycle trips, they see it as a promotion of car traffic. The coalition therefore agreed to reorganize the lump sum in this legislative period and to take better account of ecological and social concerns.
How much does that cost the state?
Finance Minister Lindner will lose tax revenue of around 4.46 billion euros in the current year alone because of the tax relief – money that the citizens also have in their wallets. By 2026, the costs will add up to around 22.5 billion euros.
Further relief for children and adults with little money: In addition to the tax measures, the Bundestag also decided to provide help for people with little money, who are particularly struggling with the high costs of heating and driving, for example. Children, adolescents and young adults affected by poverty will receive an immediate bonus of 20 euros per month from July. Families whose income is not sufficient or only just sufficient, can in future receive 229 euros per child from the state instead of 209 euros, in addition to child benefit.
Adult beneficiaries, such as recipients of Hartz IV or unemployment benefit II, receive a one-time payment of 200 euros to cope with the increased cost of living. Anyone who receives unemployment benefit I receives a subsidy of 100 euros. The money should also be paid out in July.