The package will increase the tax-free basic deduction as well as raise the level for when the top tax rate of 42 percent comes into effect. Families will also receive tax credits for dependent children.
Inflation in Germany reached 7.5 percent in July, slightly lower than the 7.6 percent recorded in June. It was mainly driven by rising energy prices.
According to Lindner, the goal is to help employees who have been hit with a higher tax burden after receiving a raise due to inflation. This means that many ultimately receive less money than before, despite the increase.
The finance minister adds that 48 million Germans would otherwise have a higher tax rate from January next year.
“That the state should benefit at a time when daily life is becoming more expensive – it is not fair and also dangerous for economic development,” says Lindner.