Your money in our sights: what the government is up to
Background: Why so much is happening now
The CDU/CSU and SPD are currently wrestling over a new coalition agreement and it’s about more than just political programs. The financial plans currently being discussed could have a profound impact on your everyday life: whether it’s paying taxes, saving or saving for retirement.
Here are the most important proposals, clearly laid out, easy to understand and with examples.
Electricity costs: small relief for many households
The electricity tax is to be reduced to the EU minimum, which could make every kilowatt hour around 5 cents cheaper.
Example: A household with an annual consumption of 3,500 kWh saves around €175 per year.
Overtime & retirement: incentives to work longer
The plan is to give tax relief for overtime. Pensioners should be able to earn up to €2,000 per month tax-free. Returning from part-time to full-time work should also be more financially rewarding.
Example: A pensioner who earns €1,800 on the side would not have to pay tax on this if the rule comes into force.
Taxes: Those who earn more (perhaps) pay more – or less
Tax relief is to be provided for high earners, for example by raising the threshold for the top tax rate. This currently applies from around €62,800; in future it could be as low as €80,000 or even €83,600. At the same time, the SPD is planning to increase the tax rate for top earners.
Example: Anyone with a taxable income of €75,000 currently pays the top tax rate. If the threshold is raised, this will no longer apply for many people and they will pay less.
Improvements are also planned for all those who commute: The commuting allowance is to increase, whether by car, train or bicycle.
Pension: Protection yes – but more expensive for everyone?
The SPD wants to keep the pension level stable at 48%. Sounds good, but without additional funds, the contribution rate could rise.
Example: With a gross salary of €4,000, this would be around €1,000 per month in future, half from the employer and half from the employee.
Assets, capital, inheritance: more burden for the rich
The SPD is introducing a wealth tax and wants to increase the final withholding tax on capital gains from 25% to 30%. Company inheritances are also to be subject to stricter controls.
Example: If you receive € 20,000 in interest or dividends per year, you currently pay € 5,000 in taxes. At 30%, it would be €6,000 – €1,000 more.
Conclusion: everything is getting more expensive? Not quite.
The negotiations show: Those who earn little will probably not be burdened additionally, in some cases even relieved. For top earners and the wealthy, however, it is likely to become more expensive.
It remains to be seen what the coalition agreement will actually say in the end, but it is worth being prepared.
Our tip:
Keep an eye on developments and check which tax advantages you can already take advantage of now.
If you want to build up assets or inherit them, you should seek strategic advice now.
We are happy to help you with all changes relating to income tax, pensions or capital gains in a clear, personal and professional manner.
