Taxpayers will only notice the tax relief planned by the federal government in the new year, with a delay, on their pay slip. Due to the “shortness of the parliamentary decision-making process” a salary, wage, or benefit statement for January 2025 “is no longer possible” the Federal Ministry of Finance told the “Handelsblatt” (Friday edition).
“It can be assumed that a correction will be made at the latest by March 1, 2025.” By this time, a “complete and lasting relief” for citizens will be implemented in practice, the ministry said. The Bundestag plans to pass the tax relief on Thursday, and the Bundesrat on Friday.
Many taxpayers will initially have less net pay in the new year, as the increasing social contributions will be deducted directly from the salary at the beginning of the year, while the income tax will often be offset in arrears by March 1 in favor of the taxpayers.
On the other hand, family benefits will be paid “punctually in January 2025” if the Bundesrat approves the law on December 20, 2024, the ministry said. The federal government wants to increase the tax-free allowances by the end of the year, offset inflation-adjusted tax increases (“cold progression”), and raise the child benefit from five to 255 euros.
Many taxpayers will even have to pay more to the tax authorities in the next year due to rising social contributions, as calculations by the financial scientist Frank Hechtner for the “Handelsblatt” show. A couple with two children, where one partner earns 3,000 euros and the other 1,000 euros a month, will have 155 euros more available in the next year. If one partner earns 5,000 euros and the other nothing, the family will have to make do with 202 euros less. A single person with a monthly gross income of 4,000 euros will have 37 euros less. Someone who earns well and receives 5,500 euros a month will have 288 euros less.