On Thursday, the Bundestag decided on several tax cuts to compensate for the high energy and food prices. This year alone, citizens should save almost 4.5 billion euros, and by 2026 the relief should total around 22.5 billion euros. The opposition criticized that this was not enough in view of the rising inflation.

Specifically, the basic allowance for income tax will be increased from the current EUR 9,984 to EUR 10,347. This should apply retrospectively to January 1st. The basic allowance is the income limit above which you have to pay income tax in Germany.

Also retroactive to January 1, the flat rate for long-distance commuters will be increased by three cents to 38 cents per kilometer. The step had already been decided for the years 2024 to 2026, but should now also apply to 2022 and 2023. The flat rate for advertising expenses will also be increased from 1,000 to 1,200 euros.

The relief will only be felt in the wallet after the tax return for 2022, i.e. in the coming year. Union, AfD and Linke criticized that the steps were too small, too late and untargeted.

Poorer households will receive additional financial relief, even as early as July. On Thursday, with the votes of the traffic light groups, the Bundestag decided on the so-called immediate surcharge for children and young people from poorer families and a one-off payment for adults in particular need.

Children and young people in families who depend on social benefits will receive 20 euros more per month from July. The maximum child allowance increases from up to 209 to up to 229 euros per month per child. The surcharge is primarily intended to support parents whose income is not sufficient for the entire family.

A one-time payment of 200 euros was agreed for adult beneficiaries of the minimum social security systems. In addition, people who are entitled to unemployment benefit II should also receive a one-time payment of 100 euros. The grant is to be paid out in July 2022. The money is intended, among other things, to compensate for additional corona-related burdens.

In their coalition agreement, the parties in the traffic light government had agreed on the immediate surcharge as a transitional arrangement until the planned so-called basic child security system, which is intended to bring together all social benefits for children, is introduced.



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