Steuerzahlerbund says German tax reform costs households €1bn a year
The Bund der Steuerzahler calculates that the coalition’s planned 2026 income-tax reform leaves households roughly €1bn worse off annually after accounting for a new 47% top rate and €8bn of legally required benefit increases.
The German government’s planned 2026 income-tax reform leaves households roughly €1bn worse off on an annual basis, according to an analysis by the Bund der Steuerzahler (the taxpayers’ association). The group says the coalition’s advertised €10bn of yearly relief shrinks to a net negative once a new top rate and legally mandated benefit increases are accounted for.
The breakdown
The draft law, which the cabinet is set to approve in early September, contains four headline relief measures that total €9.8bn per year. Finance Minister Lars Klingbeil says the package strengthens long-term workforce and growth potential.
The Steuerzahlerbund does not classify all of that sum as genuine relief. It counts roughly €8bn of the total as legally required increases to child benefit, the basic allowance and the child allowance. A new 47 per cent top rate on income above €280,000 claws back a further €2.8bn annually. The resulting net fiscal effect for households is approximately minus €1bn per year.
| Component | Amount |
|---|---|
| Headline relief total | 9.8 |
| Less: Legally mandated benefit increases | –8.0 |
| Less: New 47% top rate | –2.8 |
| Net fiscal effect | –1.0 |
| Source: FAZ, Bund der Steuerzahler | |
What happens next
The draft law is scheduled for cabinet approval in early September. The coalition has presented the package as delivering roughly €10bn of annual relief.
