Despite a deteriorating economic climate, tax revenues are expected to remain relatively stable for now. According to reports citing coalition, government, and expert circles, the updated tax forecast is not anticipated to cause a significant decline in income for the federal government, states, and municipalities.
Federal Finance Minister Lars Klingbeil (SPD) is scheduled to present the official tax forecast on Thursday. The federal government had previously had to lower its growth predictions following the outbreak of the war in Iran. In April, the government halved its forecast for the current year to 0.5 percent. Furthermore, for the kommende year (2027), the government reduced its initial projection of 1.3 percent down to 0.9 percent. This growth forecast serves as the basis for the tax estimate. However, government circles indicated that the state should fare comparatively well, suggesting that any shortfall will be limited.
Previously, the internal tax estimate for the federal government had projected a slight surplus from 2026 to 2028, with the figure for 2027 standing at 1.3 billion euros, as noted in the cabinet resolution for the 2027 budget. While the federal ministry did update its tax estimate, the introduction of new tax laws concurrently resulted in revenue projections that are 6.3 billion euros lower than initially planned. Outside of these specific periods, no major estimated deviation is expected in the overall financial planning years.
That said, the weakening economic situation is slowly showing its effect on tax receipts. In March, revenue from assessed personal income tax fell by approximately four percent year-over-year, and revenue from corporate tax dropped by around twelve percent compared to the previous year. Experts anticipate that local business tax (trade tax) will remain particularly weak, placing continuous pressure on local communities that are already struggling with record deficits.
