According to the recently presented coalition agreement between the CDU and SPD, various tax changes are planned that will affect both companies and private individuals. The following points summarize the most important changes.
1. corporate taxes and investments
- Degressive depreciation: In 2025, 2026 and 2027, investments in equipment are to be depreciated using the declining balance method at 30%. The aim is to reduce the burden on companies and encourage investment.
- Reduction in corporation tax: From January 1, 2028, corporation tax will be reduced by one percentage point in five stages.
- Option model and preferential treatment of retained earnings: The option model (Section 1a KStG) and the retention allowance (Section 34a EStG) will be “significantly improved” so that partnerships can benefit more from treatment similar to corporation tax. Furthermore, it is being examined whether the commercial income of newly founded companies can automatically be subject to the KStG from 2027.
2. income tax
- Relief for small and medium incomes: A reduction in income tax is planned for the middle of the legislative period.
- Child allowances and child benefit: The gap between the relief effect of child allowances and child benefit is to be gradually reduced. If the child allowance increases, the child benefit will also increase accordingly.
- Single parents: An increase or further development of the relief amount for single parents is planned in order to improve their financial situation.
3. solidarity surcharge
- Unchanged: The solidarity surcharge will remain unchanged according to the current plans.
4. trade tax
- Increase in the minimum assessment rate: The minimum assessment rate for trade tax increases from 200 to 280 percent in order to curb so-called “trade tax havens”.
5. tax incentives for overtime and longer working hours
- Overtime bonuses: Supplements for overtime in excess of the collectively agreed or collectively agreed full-time working hours are to be made tax-free.
- Voluntary longer working hours: Anyone who continues to work beyond the statutory retirement age can earn up to 2,000 euros a month tax-free. This is intended to make “voluntary longer working” more attractive.
- Bonus for increasing working hours: Employers who pay part-time employees a bonus if they increase their working hours to full-time can deduct this bonus from their taxable income.
6. commuter allowance
- From January 1, 2026, the commuter allowance will increase permanently to 38 cents from the first kilometer.
7. honorary office and non-profit status
- Increase in the lump sum for exercise leaders and volunteers: The lump sum for exercise leaders will be increased to EUR 3,300 and the lump sum for volunteers to EUR 960. In addition, the exemption limit from commercial business operations for non-profit associations is also to be increased.
8 Riester pension
- Reform: The existing Riester pension is to be transformed into a new, less bureaucratic pension product. The plan is to dispense with mandatory guarantees and lower product, administration and acquisition costs. A standard product with state subsidies for people with low and medium incomes is being discussed.
