Germany's €25B marriage tax break mostly benefits parents with children
Germany's income-splitting system for married couples saves taxpayers around €25 billion each year. A new analysis by the Cologne Institute for Economic Research (IW) reveals how these savings are distributed. The findings were published in Tuesday's edition of Handelsblatt. The largest share of the tax benefits—67%—goes to parents with 'tax-relevant children', meaning minors or those still in education or training. Another 30% supports families whose children are adults and have finished their studies.
Married couples with children receive 90% of the total savings. The remaining 9%, roughly €2.2 billion, goes to childless married couples. The system also favours dual-income households. These families claim 63% of the income-splitting advantage. Meanwhile, 37% of the savings benefit single-earner households. A reform of the system would likely impact this last group the most. The IW conducted the study specifically for *Handelsblatt*.
The report highlights how the €25 billion in annual tax savings is spread across different family types. Most benefits flow to parents, particularly those with dependent children. The analysis does not compare these figures to previous years, leaving trends over time unclear.
