The new year doesn't just start with a series of good resolutions. At the turn of the year, many legal innovations are also regularly announced. These changes, about which the North Rhine-Westphalia consumer advice center, among others, are providing information, will be important for all taxpayers.
Higher top tax rate
In the case of annual income, the top tax rate of 42 percent will only apply from 2023 onwards from a total amount of 62,810 euros. Previously, the limit was 58,597 euros per year. In addition, the solidarity surcharge does not apply to all taxpayers who earn less than EUR 66,915 per year. From 2024, it will be levied from an annual income of 66,761 euros. In the case of married couples and registered partnerships, double the amounts apply.
Basic allowance is increased
In addition, the basic allowance for all taxpayers will be increased by 561 euros to 10,908 euros per year on January 1, 2023. From 2024, the amount will increase by a further EUR 696 to EUR 11,604. No taxes are due on income up to this level.
The child allowance will also be increased retrospectively
The child allowance (including the allowance for care, education and training needs) will be increased retroactively to January 1, 2022 by 160 to 8548 euros. On January 1, 2023, it will be increased by a further EUR 404 to EUR 8952 and on January 1, 2024 by a further EUR 360 to EUR 9312.
Saver allowance increases
The lump sum for saving increases from 801 to 1000 euros. Here, too, double the amount applies to married or registered cohabitants, i.e. 2000 euros. Up to this amount, income such as interest, dividends or realized price gains from securities transactions are exempt from tax. For higher amounts, the withholding tax of 25 percent plus any solidarity surcharge still applies.
In addition, the legislature wants to allow loss compensation for capital income in marriages and registered partnerships in the future. In concrete terms, this means that the profits of one partner can be offset against the losses of the other. That was not possible until now.
Limit for solidarity surcharge increases
In addition, the solidarity surcharge does not apply to all taxpayers who earn less than EUR 66,915 per year. For the first time since the partial abolition of the solidarity surcharge in 2021, the tax-free allowance will be increased from the previous EUR 16,956 to EUR 18,130 (standard income tax) or to EUR 36,260 (previously EUR 33,912) for joint assessment.
More money for the home office
In addition, the amounts for the home office will be increased with the new year. Previously there was a flat rate of five euros for 120 days, i.e. a maximum of 600 euros per year. The legislature now grants a home office flat rate of six euros per day for 210 days per year, which increases it to a maximum of 1260 euros in total. A separate office is not required for the tax deduction. This is intended to relieve families with smaller apartments in particular. On home office days, taxpayers cannot claim travel expenses from home to work as income-related expenses.
If, on the other hand, there is a separate study that is used because the employer does not provide a workplace, a flat rate of 1250 euros per year applies. It used to be a maximum amount, which will now be granted as a lump sum in the future.
Inflation bonus from boss
After the Corona- there is now the inflation bonus. Employers have been able to pay their employees a bonus of up to 3,000 euros since October 1st. With this inflation bonus, neither taxes nor social security contributions are due. Payment can be made once or in multiple amounts. The inflation bonus is valid until the end of 2024.
Higher depreciation of residential buildings
The so-called linear depreciation rate will be increased from two to three percent in 2023. As a result, real estate owners can write off the acquisition or production costs of residential buildings in 33 years and no longer spread over 50 years. It remains to be seen whether this will noticeably stimulate the construction of new apartments. In 2022, significantly fewer than the 400,000 units targeted by the government were built.
More extras to pay
If the employer gives the employee a meal, taxable wages may exist for the tax authorities. The so-called benefits in kind are decisive: From January 1, 2023, the monthly values for meals will increase to 288 euros (previously: 270 euros). From 2023, the following values are to be used for discounted or free meals:
The reference value in kind in the social security remuneration regulation regulates the tax assessment of meals and is relevant both for the assessment of canteen meals provided by the employer and for the issue of meal vouchers or restaurant checks. The new non-cash benefit values apply from the first billing month of 2023.
As for food, the values for accommodation or rent also increase. The reference value in kind for free accommodation in 2023 is 265 euros nationwide (previously: 241 euros) per month. If an employee consistently receives both free accommodation and free food, this means for the tax office: The monthly gross income on which taxes and social security contributions are payable increases to 553 euros (288 euros plus 265 euros).
Tax exemption for photovoltaic systems
In future, income from the operation of photovoltaic systems will be tax-free up to an output of 30 kW for single-family houses and commercial properties or 15 kW for individual residential units. The more favorable value applies. The real estate must be used primarily for residential purposes.
Less support for e-cars
From 2023, the purchase of a new electric car will be subsidized less than before. With a purchase price of up to 40,000 euros without VAT, there is only a subsidy of 4500 euros plus a manufacturer discount of probably 2250 euros. By the end of 2022, the state will pay an additional 6,000 euros and the manufacturer discount is 3,000 euros per vehicle. With new e-cars, which cost a maximum of 65,000 euros net, there are only 3000 euros instead of 5000 euros. And the manufacturer discount is expected to drop from 2500 to 1250 euros. Plug-in hybrids are no longer subsidized.
Smoking becomes more expensive
The tobacco tax for a pack of 20 cigarettes will increase by an average of ten cents as of January 1st. A pack of branded cigarettes currently costs an average of EUR 7.60. Manufacturers are allowed to pass on the higher taxes to end customers - smoking is therefore becoming more expensive. The tax increase also applies to (water) pipe tobacco, for which taxes are now levied at 19 euros per kilogram (previously: 15 euros).
The Tobacco Tax Modernization Act provides for tobacco tax increases for cigarettes and fine-cut tobacco in four stages over a period of five years, starting in 2022, up to 2026. In the years 2025 and 2026, 15 cents per pack should be added again.
(This article was first published on Sunday, January 01, 2023.)
