Klingbeil to unveil tax-relief plan for German middle incomes, with high earners paying more

Federal Finance Minister Lars Klingbeil, who is also SPD chairman and Vice Chancellor, told the Süddeutsche Zeitung that he intends to present his tax-reform concept in the coming weeks. “We are working flat out on it,” he said, reiterating that the centrepiece will be a significant relief for low and middle incomes. “Those who keep the shop running every day must end up with more in their pockets,” Klingbeil told the paper. The relief, he said, must also be “realistically” financed: “Top earners with six-figure salaries must make their contribution.”

Chancellery chief Thorsten Frei, of the CDU, used an interview with the Neue Osnabrücker Zeitung to draw his own line. The top rate, Frei said, should “concentrate on the truly rich — and not over-tax the high performers of the middle.” He rejected designing the reform as “pure redistribution,” arguing instead for “genuine relief for as many taxpayers as possible,” which he said would in particular benefit domestic consumption.

The black-red coalition has set the new tax architecture to take effect on 1 January 2027. At the end of March, Klingbeil said the goal was to relieve 95 percent of employees “noticeably, by several hundred euros a year” — a package that would cost many billions. The counter-financing remains the open question: the SPD wants higher levies on top incomes and on inheritances, which the CDU views with skepticism. The friction sits inside a coalition that on 29 April approved a 2027 budget built on record borrowing and new taxes, and follows signals from CSU leader Markus Söder of openness to heavier taxation of the wealthy.