Status: 28 October 2026. The Bundestag held the first reading of the 2027 income tax reform on 8 October and sent it to the Finance Committee. Nothing is passed yet, but the key figures are in the government draft. What will show up on your payslip, and where does the reform take money away?
Who gets more?
Mainly families. Under the draft, child benefit (Kindergeld) rises from €259 to €267 a month, and to €272 in 2028; the child allowances grow from €9,756 to €10,056 (2028: €10,236). The basic allowance goes from €12,348 to €12,564, and to €12,900 in 2028. The employee lump-sum allowance, which the tax office grants without receipts, would rise from €1,230 to €1,430. People who work Sundays and public holidays could have tax-free surcharges calculated on an hourly wage of up to €75 instead of €50; for night work the cap stays at €50.
The Finance Ministry has worked through examples for 2028: a nurse and a bus driver on €2,800 gross each, with two children, would save about €632 a year together; a single parent on €2,800 gross with two children about €468; a single person on €5,000 gross about €192. The law firm Ecovis points out that most of this comes from child benefit and child allowances: the pure tax-scale relief for middle and higher earners is just over €100 in 2027 and just under €170 in 2028.
What gets more expensive?
The offsetting measures hit everyday items. The tax credit for tradesperson services falls from 20% to 15%, and the maximum credit from €1,200 to €900 a year. Spend €6,000 a year on repairs and you keep €300 less. The flat-rate tax on mini-jobs rises from 2% to 5%; employers pay it, so on €600 a month that is €360 a year instead of €144. Mini-jobbers’ take-home pay is unchanged, but the job becomes dearer for businesses – our assessment, not a statement from employers. The 45% rate would start at €250,000 and a new 47% rate at €280,000.
The Annual Tax Act 2026, debated in parallel, adds two points that affect many people: interest on back payments and refunds rises from 0.15% to 0.3% a month, and anyone with an ELSTER account would receive tax assessments electronically from 2027.
How certain is it?
Not certain. Finance Minister Lars Klingbeil (SPD) defends the reform as “the right priorities within what is possible”. Fritz Güntzler (CDU/CSU) calls the relief large but would prefer full compensation for bracket creep. The AfD speaks of a disguised tax rise; Die Linke says the relief is too small. Business groups such as the DIHK object to the higher top rates and the mini-job tax, as the NWB expert blog notes. The Bundesrat must consent, and changes are likely.
Our assessment: child benefit and allowances are unlikely to fail because they rest on the official subsistence-minimum report, while the tradesperson credit and mini-job levy could well be revised. If you plan major repairs in 2027, time the invoices after the vote. Our earlier overview of child benefit is here.
Sources: Bundesregierung, Bundestag, Ecovis, NWB expert blog
