Germany plans significant tax and labor reforms for 2027

The German government is preparing a series of fiscal and labor reforms scheduled for 2027. A key component is the adjustment of minijob regulations, where the monthly earnings limit will rise to 633 euros due to the statutory minimum wage increasing to 14.60 euros per hour. Additionally, the flat-rate tax for minijobs is proposed to rise from 2 percent to 5 percent.

Proposed income tax reforms include increasing the basic tax-free allowance to 12,564 euros and raising child benefits to 267 euros per month. These measures aim to provide relief to taxpayers, though the final implementation depends on parliamentary approval.

Separately, the federal government is facing fiscal challenges as September tax revenues showed only a slight 0.4 percent increase compared to the previous year. While capital gains taxes rose, growth in wage and value-added taxes remained moderate, potentially leaving a multi-billion euro gap in projected annual revenue.