Updated on 05/12/2022 at 19:05
- Recently, citizens have had to pay a lot for heating and driving.
- The Bundestag decides on many exemptions – but some will only be felt on the next tax return.
- Travelers, poor families and families in particular will benefit from the package.
Due to rising prices for heating, driving and in the supermarket, the federal government has launched several relief packages – some of which were approved in the Bundestag on Thursday. Specifically, it is about measures worth billions aimed at ensuring that citizens pay less taxes. Those who have a long trip to work benefit in particular.
Finance Minister Christian Lindner (FDP) had already argued during the first debate in Parliament that relief should dampen “expected inflation”. Every citizen should feel that the state exempts him. This is important to prevent a dangerous wage and price spiral that could lead the entire economy into stagflation, that is, a combination of price hikes, economic stagnation and unemployment.
However, given high inflation, the package doesn’t go far enough for the opposition. On Thursday, the union criticized not raising the basic bonus enough. In addition, the money will reach citizens too late, that is, after the 2022 tax return next year.
The following actions were included in the package that was identified Thursday evening:
The basic allowance increases by 363 euros
The so-called basic provision for income tax will be raised from the current €9,984 to €10,347. As a result, all taxpayers are required to pay lower income tax – retroactively from January 1 this year.
The basic allowance is the limit that the income tax payable must be higher in Germany in the first place. If you have income less than this amount – after all deductions such as income-related expenses – you do not have to pay taxes. If you exceed it, you will pay income taxes starting at €10,348 in the future.
Long-distance travelers get a higher flat rate
Anyone who has to travel farther to work is particularly affected by rising fuel costs. That is why the increase in the lump sum for long-distance travelers, which is actually only due in a couple of years, will be brought forward to this year.
Long-distance travelers are citizens who must travel 13 miles or more to get to work. Retrospective to January 1, they can calculate 38 cents per kilometer, which is three cents more than before. However, this should only apply until 2026.
Traveler’s allowance is the portion of income-related expenses on your tax return. However, long-haul travelers usually get a little more than the lump sum, so they directly benefit from the increase. The coalition stresses that those who have to travel much fewer distances will also be exempted through the higher flat rate income tax benefits. However, the traveller’s allowance is controversial, especially among the Greens. Although he can also be credited with train or bike trips, they see it as a promotion for car traffic. Therefore, the coalition agreed to reorganize the total amount in this legislative period and to take better account of environmental and social considerations.
An immediate supplement for children and a one-time payment for adults in need
The poorest families will receive the cash subsidy from July. On Thursday, by a vote of traffic light groups, the Bundestag decided on a so-called immediate surcharge for children and young people from poor families and a one-time payment for adults with special needs.
Children and young people in families who depend on social benefits will receive an additional €20 per month from July. The maximum amount of child allowance increases from 209 euros to 229 euros per month for each child. The additional cost is mainly intended to support parents whose income is not enough for all family members.
A one-time payment of €200 was agreed to for adult beneficiaries of the minimum social security systems. In addition, persons entitled to unemployment benefit 2 must receive a one-time payment of €100. The grant will be paid in July 2022. The funds are intended, among other things, to offset additional burdens related to COVID-19.
Advertising fee increase
Furthermore, the fixed employee allowance increases retroactively from January 1st. This is the so-called flat rate of income-related expenses, which is automatically taken into account on the tax return of all employees if they do not mention the higher income-related expenses themselves. So far, taxable income can be reduced by 1,000 euros, and in the future it will be 1,200 euros.
How much does that cost the state?
Finance Minister Lindner will lose around €4.46 billion in tax revenue this year alone due to the tax break – money that citizens also have in their wallets. By 2026, the costs will reach about 22.5 billion euros. (dpa/fra)