Citizens will be permitted to earn at least 12,504 euros tax-free in the coming year. This originates from the draft of the new minimum subsistence report of the Federal Government, which the Cabinet plans to approve shortly, as cited by the Süddeutsche Zeitung.
According to this report, the so-called objective minimum subsistence level for single persons will increase further to 12,780 euros per person in 2028. For married couples, the values are about two-thirds higher, but this is less relevant because, according to the Income Tax Act, the state grants double the tax-free allowance of a single person.
For Finance Minister Lars Klingbeil (SPD), the report is not a cause for concern because the government has already taken precautionary measures with the planned income tax reform. If the Bundestag and the Bundesrat approve the plans, the basic tax-free allowance will increase next year from the current 12,348 euros to 12,564 euros. A further significant increase to 12,900 euros is planned for 2028. Married couples will correspondingly receive 25,128 or 25,800 euros.
With this, all tax-free allowances exceed the values that the minimum subsistence report requires. Therefore, an adjustment of the tax reform, which would involve further revenue losses for the federal, state, and local governments, is not necessary. Klingbeil is also safe regarding the minimum subsistence level for children: According to the report, statutory basic allowances of 6,864 or 6,996 euros are required for children for the next two years. The coalition’s intended sums in the tax reform, of 7,128 and 7,308 euros respectively, are higher.
According to jurisprudence from the Federal Constitutional Court, the tax office may not touch the part of a citizen’s income that is necessary to maintain a livelihood. The legislator must take into account the need for food, clothing, toiletries and household goods, as well as the costs of cold rent, heating, and insurance. For children, education costs are also included.
