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German income tax reform and Minijob regulatory changes

Updated 16 times since CLSTR started tracking revisions of this situation.

What changed

2026-08-21 10:14 UTC → 2026-08-22 00:05 UTC · added removed

The German federal government is proceeding with an income tax reform scheduled for January 1, 2027. To ensure political and social acceptance, the Ministry of Finance has removed certain planned subsidy cuts from the revised draft, specifically deciding against the abolition of the tax-free allowance for employee discounts. This decision has resulted in a total expected tax revenue reduction of 1.55 billion euros for 2027. The reform includes a two-phase increase of the basic tax-free allowance to 12,564 euros in 2027 and 12,900 euros by 2028. To fund these measures, the government will apply a 45 percent rate from 250,000 euros and a new 47 percent rate for income exceeding 280,000 euros. The Ifo Institute Arbeiterwohlfahrt (AWO) has criticized the plan, stating draft, alleging it is more about compensation than economic stimulation. Ifo increases inequality. AWO President Clemens Fuest noted Michael Groß stated the reform primarily offsets bracket creep caused plan disproportionately favors wealthy households, noting that the monthly financial advantage for high-income families with children is projected to grow from 127 euros to 151 euros by inflation rather than providing genuine relief. 2028. The AWO also noted that the 25-euro ‘Kindersofortzuschlag’ for low-income households will be abolished, calling for funds to be redirected toward poverty reduction. Regarding the ‘Minijob’ system, the special status of marginal employment will be preserved, though costs for employers will rise. Starting in 2027, the flat-rate tax for marginal employment will increase from 2 to 5 percent, and the health insurance flat-rate contribution for commercial minijobs will rise from 13 to 17.5 percent. The monthly earnings limit for minijobs has already increased to 603 euros in 2026 due to rising minimum wages. Broader economic pressures are mounting as net social welfare expenditures rose by 6.1 percent in 2025 to 21.5 billion euros. While spending on basic security for the elderly and those with reduced earning capacity accounted for 54.9 percent of the total, its relative share has declined for three consecutive years. A significant driver of the overall increase was long-term care assistance, which rose by 13.3 percent to 6 billion euros, now representing 27.8 percent euros. Burkhard Jung, President of total social assistance spending. the German Association of Cities, has called for a fundamental reform of long-term care insurance to relieve municipal budgets.

Versions

  1. 2026-08-22 00:05 UTC German income tax reform and Minijob regulatory changes
  2. 2026-08-21 10:14 UTC German income tax reform and Minijob regulatory changes
  3. 2026-08-21 09:03 UTC German income tax reform and Minijob regulatory changes
  4. 2026-08-21 09:03 UTC German income tax reform and Minijob regulatory changes
  5. 2026-08-21 07:42 UTC German income tax reform and Minijob regulatory changes
  6. 2026-08-21 05:45 UTC German income tax reform and Minijob regulatory changes
  7. 2026-08-21 03:31 UTC German income tax reform and Minijob regulatory changes
  8. 2026-08-20 17:41 UTC German income tax reform and Minijob regulatory changes
  9. 2026-08-20 11:48 UTC German income tax reform and Minijob regulatory changes
  10. 2026-08-20 06:47 UTC German income tax reform and Minijob regulatory changes
  11. 2026-08-20 03:38 UTC German income tax reform agreement for 2027
  12. 2026-08-19 18:25 UTC German income tax reform agreement for 2027
  13. 2026-08-19 15:53 UTC German income tax reform agreement for 2027
  14. 2026-08-19 10:39 UTC German income tax reform agreement for 2027
  15. 2026-08-18 12:07 UTC German income tax reform proposal
  16. 2026-08-18 12:05 UTC German income tax reform proposal
  17. 2026-08-13 08:41 UTC German income tax reform proposal

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