By Maria Martinez
BERLIN, Sept 2 (Reuters) – Germany’s cabinet approved a €10 billion ($11.58 billion) income-tax reform package on Wednesday designed to ease the burden on low- and middle-income households, particularly families with children.
The measures will be introduced in two stages and take full effect in 2028, the finance ministry said.
“We are providing relief to families with children,” Finance Minister Lars Klingbeil said. “We are ensuring that a little more is left at the end of the month.”
A middle-income family with two children will have more than €600 extra per year available from 2028, according to the ministry.
Child benefit will rise to €267 per child per month in 2027 from €259 currently, before increasing to €272 in 2028, while the basic tax-free allowance will also increase to €12,564 in 2027 and €12,900 a year later.
“We have also decided to make the tax system fairer,” Klingbeil said. “Those with the very highest incomes must make a somewhat greater contribution.”
The government will partly offset the cost by raising taxes on high earners. The existing 45% top rate will apply from taxable income of €250,000, while a new 47% rate will be levied on annual income above €280,000.
($1 = 0.8636 euros)
(Reporting by Maria Martinez, Editing by Linda Pasquini)
