Citizens' income ends the Hartz IV system in the coming year. In view of the higher remuneration, Finance Minister Lindner now wants to follow suit with the basic allowance and is aiming for a greater exemption of income from which taxes have to be paid.
According to an insider, Federal Finance Minister Christian Lindner wants to make larger portions of income tax-free in 2023 than before. The basic allowance for income tax should therefore increase by 561 euros to 10,908 euros, the child allowance will be increased by 404 euros to 6024 euros. "If the standard rate of citizen income increases in January, then the basic allowance for wage tax must also increase," Lindner told the "Bild" newspaper. "Beneficiaries and working taxpayers alike deserve fairness."
The higher allowances are to be adjusted in the parliamentary procedure for the Inflation Compensation Act, as the insider said. Lindner had recently always emphasized that some of the specifications are provisional. The FDP boss wanted to wait for a new expert report on the necessary subsistence level, which should be available in the next few days or weeks.
The so-called cold progression is to be combated with the Inflation Compensation Act. This occurs when the tax system is not adjusted to inflation. Because of the progressive tax rate, taxpayers can then be subjected to higher deductions, even if they no longer have any real income. This is now to be adjusted for 2023 and 2024.
At the beginning of September, the traffic light coalition agreed on the III relief package to adjust the key figures in the income tax rate. A few weeks earlier, Lindner had suggested turning the screws on the income tax rate to relieve the burden on citizens. He suggested raising the basic allowance, i.e. the income up to which no tax has to be paid, from the current EUR 10,347 to EUR 10,632 in the coming year and EUR 10,932 in 2024. The traffic light had already raised the basic allowance retrospectively to January 1 as part of the first relief package.
