Inflation is at a record high - many citizens are threatened with a hidden tax increase. Lindner wants to prevent this with targeted measures. Among other things, the plan is to increase the child and basic allowance.
Federal Finance Minister Christian Lindner wants to prevent creeping income tax increases against the background of high inflation. Lindner today presented an adjustment to the child allowance, the basic allowance and the key points for the tax rates in order to compensate for the so-called cold progression. In times of inflation, this can mean that despite wage increases, citizens ultimately have less money at their disposal because they are subject to a higher tax rate.
According to Lindner, without state intervention, the effect would lead to an additional tax burden of 15.8 billion euros in the coming year. In 2024 it would even be 29.3 billion euros. Such a "secret tax increase" is "unfair and undemocratic," said Lindner. "The state must not become the winner of inflation." 48 million working citizens are affected.
To ensure that the "working middle class" does not lose out in times of inflation, tax law must be updated by increasing the basic allowance and the tax rates. Lindner therefore called on the parliamentary groups to quickly pass the Inflation Compensation Act.
According to Lindner's plans, the child allowance is to increase from EUR 5,620 this year to EUR 6,024 next year and to EUR 6,384 in 2024. The basic allowance of currently 10,347 euros is to increase to 10,908 euros in the coming year. In 2024 it should then be 11,604 euros.
There are also changes in the so-called progression zone - i.e. the income threshold from which the tax rate increases progressively. This threshold is currently 14,927 euros. In the following year it should be 16,004 euros and in 2024 17,011 euros. As a result, the threshold above which the top tax rate is due increases from EUR 58,597 (2022) to EUR 62,826 (2023) to EUR 66,778 (2024).
The Treasury released a number of example calculations. For a single person with a gross annual income of 28,000 euros, the savings add up to 197 euros in 2023 and 405 euros in 2024 - in each case compared to the current year 2022. A family with two earners, two children and an annual income of 56,004 euros can start in the coming year with 818 Calculate more euros and in 2024 with 1228 euros more.
