Germany to introduce new tax tiers for high earners in 2027

The German federal government is set to reform the taxation of high earners starting in 2027. The changes involve restructuring the so-called ‘Reichensteuer’ (rich tax) by introducing two distinct high-income tiers.

Under the new system, the threshold for the 45 percent tax rate will be lowered from the current 277,826 euros to 250,000 euros of annual taxable income. Additionally, a new top tax rate of 47 percent will be introduced for the portion of income exceeding 280,000 euros.

Germany utilizes a progressive taxation system, meaning these higher rates apply only to the portion of income that falls within the specific brackets rather than the total income. Finance Minister Lars Klingbeil stated that the reform aims to ensure those with the highest incomes make a larger contribution, framing the move as a matter of fairness.