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Thursday 10 September 2020
Fiscal estimates from the federal government have just forecast a hole of another 20 billion euros. However, the Bundestag sticks to a law that should exempt families from taxes from 2021. It comes from the quiet times before the corona pandemic.
Despite the heavy burden on the state treasury due to the Corona crisis, families and taxpayers should be financially relieved next year. In the afternoon, the Bundestag debated the so-called Family Assistance Law for the first time. An increase in the child benefit is expected from January by 15 euros to 219 euros for the first and second child. Furthermore, higher tax breaks are foreseen.
CDU politician Antje Tillmann said in the debate that significant tax revenues are being returned to citizens, despite the crown situation. The opposition criticized the relief for being too small. Left-wing MP Katrin Werner said the increase in child benefits was a drop in the bucket.
In their coalition agreement at the beginning of his reign, the Union and the SPD had agreed to increase the child benefit by a total of 25 euros. The first increase of 10 euros was in July 2019, and on January 1, 2021 another 15 euros will be added. For the third child, the child benefit increases to € 225 and for the fourth and each additional child to € 250.
At the same time, according to the bill, families with higher incomes who do not benefit from child benefit will receive a tax relief. The so-called child allowance increases by more than 500 euros to a total of 8,388 euros. This part of the income is not taxed. The basic income tax relief is also expected to increase from 9,408 euros to 9,696 euros, which in turn benefits all incomes. This is also part of the income that is not taxable.
The taxpayers association praised the plans. These had a positive effect on the wallet of citizens in early 2021. A single child without children with an annual income of 40,000 euros would mean a tax savings of about 100 euros per year, according to the taxpayers association. A family with a single employee with 60,000 euros and two children would have calculated 360 euros more in child benefit and a tax saving of 156 euros per year. After deliberations in the Bundestag, the changes have yet to be made by the Bundesrat.
