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Germany agrees multi-billion euro tax relief to help poor families

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Staff Writer | June 27, 2018
The German government is set to sign off a proposal from the Finance Ministry on Wednesday that will provide tax relief totalling €9.8 billion a year.
Olaf Scholz
Europe   Finance Minister Olaf Scholz
Finance Minister Olaf Scholz promised it would make a big difference to low earners.

As of 2019 families with a household income of €60,000 will have €251 more in their pockets per year due to several small changes to tax and benefits payments, The Local reported.

Child benefits will be raised by €10 a month, while below the base level - where one doesn't pay tax - will also be increased. Additionally the government is set to agree to €2.2 billion in tax relief to counter the "cold progression" whereby inflation puts people in higher tax categories without their real income actually increasing.

All these small changes taken together will create a “noticeable strengthening of families’ finances, Finance Minister Olaf Scholz told the Rhein-Neckar-Zeitung. Scholz added that the tax relief would be felt most by parents on low incomes.

But families on higher incomes are also set to benefit from the measures. A household with a total income of €120,000 will find itself €380 richer each year.

While the numbers sound small, the changes will mean that the government takes in close to €10 billion less in tax each year.