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reTaxpayer gifts are only delivered one week after Christmas Eve. At the end of the year, they benefit from several legal changes that take effect at the end of the year, with the partial abolition of the solidarity surcharge as by far the most important individual measure: 90 percent of previous payers will be released from the load, 6.5 percent at least partially. As calculations by tax expert Frank Hechtner for FAZ show, the relief from tax authorities through the bank is greater than the burdens of various changes in social security.
“An important part of the relief comes from the reduction of the solidarity surcharge”, explains the economist. In his words, it would be desirable for politicians to find a viable solution next year on how the solidarity surcharge will continue. “Whether complete abolition, integration or further collapse is primarily a political decision, but it must ultimately be made,” he said.
According to his figures, a single child without children can earn around 1050 euros more per year, which is the case for a gross income of 6000 euros per month. According to the table, a single mother with a child and 7,000 euros a month is the one that benefits the most from this group; will have 1,212 euros more next year. Very high income parents with two children can even expect up to 2,600 euros more (combination of 9,500 euros and 4,000 euros per month).
Increase in child benefit for the new year
The fact that people with high incomes perform above average is due to the burden of the solidarity surcharge, which increases with income; therefore, there is now progressive relief from the omission of the solos. But this connection only applies up to certain income because the relief has been limited. Where the limit is depends on marital status, children, and other individual factors. For singles without children, there is no longer a solidarity surcharge of up to 6,205 euros per month (that is, 74,460 per year), as the holder of the chair of business taxation at the Friedrich-Alexander-Universität Erlangen-Nürnberg says. Up to a monthly rent of 9165 euros, it no longer works in its entirety (slip zone). Then the full 5.5 percent surcharge is applied again. According to the information, a married couple with a single employee and two children will no longer have to pay a solidarity surcharge of up to 12,843 euros gross per month or 154,116 euros next year. In this case, the slip zone extends to 18,613 euros per month or 223,356 euros per year. Only then do the solos take full effect again.
In addition to the partial abolition of the Soli, there are some other changes at the turn of the year: the tax-free basic amount increases by 336 euros to 9,744 euros, the other values of the basic rate increase by about 1.52 percent compared with this year. In this way, wages that rise with prices must be freed from additional burdens that would otherwise threaten the progressive tax rate (mitigation of the so-called cold progression). In addition, there are larger allowances for children, on the one hand for the material subsistence level, on the other hand, for care, education or training. This translates into an increase of a total of 288 euros per child and parent compared to 2020 (plus 576 euros of joint appraisal) ”, explains the tax expert Hechtner, who highlights in this context that the allowance per child is above the minimum constitutionally required. The coalition was also generous in terms of child benefits. The child benefit increases at New Year’s Eve by 15 euros per month and per child. This increase is based on the promises made in the coalition agreement and therefore far above what would have been legally binding, he said.
Further adjustments stem from the transition to subsequent pension taxes. In 2021, 92 percent of payments to the legal pension insurance will be taken into account, that is, it will be tax free. At the same time, for those who will retire next year, the proportion of the pension that will be taxed will increase (81 percent will be taxable for them, which is 1 percentage point more than for 2020 pensioners). In the case of social security, on the one hand, the average additional contribution from health insurance increases by 0.2 percentage points to 1.3 percent, and on the other hand, the maximum contribution limits are increased. Those who earn a correspondingly large amount of money have to pay contributions on a larger part of their income.
The tax relief is greater than the additional burden of social insurance, even without the partial abolition of the additional tax, which was decided at the end of 2019. According to Hechtner’s figures, the only exception is the extreme case of a single person without children who earn 1,000 gross euros per month. According to calculations, you will have 8 euros less per year in 2021 than in 2020. With the legal minimum wage and 26 hours a week, this is roughly the amount of income. So everyone who works fully earns more. Anyone who only earns 1000 euros a month can expect other benefits from the state. But Hechtner did not take into account income replacement benefits, transfer payments or social assistance, or church tax.
