German tax reform 2027‑28 risks net loss for many earners

The government’s 2027‑28 income‑tax reform raises basic allowances, lifts child benefit and expands tax‑free limits, but simultaneously increases pension, health and long‑term‑care contributions. Calculations by financial scientist Frank Hechtner (FAZ) that include the higher social‑security contributions show that the promised net‑pay increase can be wiped out for many workers.

A single employee earning €3,000 gross per month would lose about €9 of net income per year, while a €6,000 gross earner would be €242 poorer, and a €9,000 earner €904 poorer. Families and single parents receive modest gains – for example a single parent with one child earning €5,000 could see a net increase of up to €25 per year – but the relief remains limited.

The reform also doubles the flat‑rate tax on minijobs from 2 % to 5 % and raises the child‑benefit allowance to €272 per month in two steps. Finance Minister Lars Klingbeil and Chancellor Friedrich Merz have highlighted the package as a relief for low‑ and middle‑income households, yet the net‑effect calculations suggest many will see little or no benefit once higher social contributions are accounted for.