Differences in Opinion Surface Between Union and SPD Regarding Discharge Tax and Top Rates
In the heart of German politics, a heated dispute between the ruling coalition parties, the Union and SPD, over income tax reform proposals has been ongoing. However, as of August 2025, no conclusive resolutions have been reached, and no major legislation directly reforming income tax rates has been enacted.
The latest legislative action, the Growth Opportunities Act, passed in early 2024, focuses primarily on corporate tax matters, such as interest deduction limitations, temporary loss carryforward increases, R&D allowances, depreciation changes, and mandatory electronic invoicing, starting January 2025.
The ongoing discussions seem to be concentrated on corporate and business tax issues, such as anti-hybrid rules and CFC amendments, and incentives like those for e-mobility. The personal income tax rates and framework remain consistent with the 2024/2025 scheme, pending further legislative changes.
Kay Gottschalk, an AfD financial politician, deemed the demand for income tax reform as empty rhetoric. On the other hand, Heidi Reichinnek, parliamentary leader of the Left, found it unbearable and unfair that hard work in Germany is heavily taxed while inherited wealth is barely taxed at all. Andreas Audretsch, parliamentary vice-president of the Greens, accused the coalition of prioritizing tax cuts for the rich over the broader population.
Steffen Bilger, the parliamentary business manager of the CDU/CSU faction, stated that the Union shares the goal of relieving smaller and medium incomes. Dirk Wiese, the parliamentary business manager of the SPD faction, demanded relief for low and average earners, as well as "heavier taxation of very high incomes." The SPD is open to discussing this demand, according to Dirk Wiese.
The AfD, on the other hand, criticized Germany's high tax and burden rate, stating that it deters skilled workers from coming to the country. The Left demanded far-reaching steps, including the reintroduction of the wealth tax.
The Union has expressed reservations about the SPD's proposal to implement relief for small and medium incomes in income tax. The coalition dispute is between the Union and SPD over tax policy, with Steffen Bilger stating that a fair tax policy should not be class warfare, but should value effort and performance.
Despite the ongoing discussions, the status quo remains. The personal income tax rates in Germany for 2025 remain progressive, with rates starting at 14% and maxing out at 45% on very high incomes, along with a mostly phased-out solidarity surcharge for most taxpayers. As the debate continues, it remains to be seen whether a resolution will be reached and what impact it might have on Germany's tax landscape.
[1] Growth Opportunities Act [2] German Income Tax Rates 2025 [3] Corporate Tax Reforms in Germany [4] E-Mobility Tax Incentives in Germany
- The Growth Opportunities Act, passed in early 2024, concentrates on corporate tax matters, such as interest deduction limitations, while personal income tax rates remain consistent with the 2024/2025 scheme, pending further legislative changes in Germany.
- Despite the ongoing dispute between the Union and SPD over income tax reform proposals, the German Income Tax Rates 2025 remain progressive, with rates starting at 14% and maxing out at 45% on very high incomes, along with a mostly phased-out solidarity surcharge for most taxpayers, as the debate continues.
