Bundesrat supports tax law amendments for soldiers and divorcees

The German Bundesrat has supported several amendments within the proposed Annual Tax Act 2026 to prevent tax disadvantages for specific groups.

Regarding military personnel, committees recommended striking a planned change that would have reduced the tax-free status of separation allowances (Trennungsgeld). The proposed amendment sought to redefine the change of a primary place of work from 48 months to 24 months, which would have negatively impacted soldiers' ability to receive these allowances tax-free.

Additionally, the Bundesrat supported an initiative from Baden-Württemberg concerning 'divorce real estate.' The proposal aims to prevent a tax trap where a co-owner moving out due to separation loses the tax exemption for selling a property used for personal residential purposes. The goal is to ensure tax exemptions remain valid if the property was used for self-occupancy until the separation-related move. These measures must still be deliberated by the Bundestag.