Germany's Merz Government Unveils 34‑Point Economic Relief Package

The new coalition government led by Chancellor Friedrich Merz presented a 34‑measure package aimed at easing the tax burden on German households. The plan targets an average yearly relief of about €600 per household, with a total cost of €10 billion, but full benefits will only materialise from 2028 onwards. Key components include raising the basic tax allowance, increasing child benefits, and modestly adjusting tax brackets for middle‑income earners.

Funding is to come from higher levies on top‑income earners, with the 45 % rate applying from €250,000 of taxable income and a rise to 47 % at €280,000. A proposed increase in inheritance and wealth taxes was dropped during negotiations, prompting criticism from SPD leaders who view the compromise as a defeat for the party and an unfair distribution of relief.

The government argues the package avoids a “Big Bang” overhaul, instead fine‑tuning several levers to steer the economy toward steadier growth while sparing small and medium‑income households. Opposition parties and analysts warn that postponing the full impact until 2028 limits immediate consumer benefit and may leave wealthier individuals largely unaffected.