Germany’s federal government will collect €4.1bn more in tax in 2027 than expected in May, according to the latest official tax estimate, bringing the total to €398.6bn. Counting the states and municipalities, the gain is €10.9bn, or about €1,044.2bn instead of €1,033.3bn. By 2030 the cumulative upside reaches €43.4bn. According to Finance Minister Lars Klingbeil (SPD), that is still not enough to pay for the electricity-tax cut Chancellor Friedrich Merz (CDU) announced on 12 October.
The reason lies in the offsets. Because the economy is growing faster than expected (2026 forecast: 1.3% instead of 0.5%; 2027: 1.1% instead of 0.9%), the debt brake lets Berlin borrow about €2.5bn less than planned. The income-tax reform costs a further €1.7bn. “For 2027 we gain no new room for manoeuvre overall, but we also do not have to close any new gaps,” Klingbeil said in Berlin. He had already plugged a €34bn hole in the draft budget partly with taxes on plastic, tobacco and sugar; not all are enacted, and the Union has reservations.
What the cut costs and what a household would save
Cutting electricity tax to the EU minimum for households and small businesses would cost about €5.4bn a year. Private customers currently pay 2.05 cents per kWh; the EU minimum is 0.1 cents. The Stiftung Klimaneutralität think tank calculates that a household using 3,500 kWh a year would save about €80, or around €270 with a heat pump and an electric car. It puts the households’ share of the cost at roughly €2.5bn; the rest of the €5.4bn presumably falls on small firms.
Since the start of 2026 only manufacturing, agriculture and forestry pay the reduced rate. The coalition committee decided that in July 2025, although the CDU/CSU and SPD had promised a cut for everyone in their coalition agreement. Households, retailers and service firms still pay the full rate, and the draft 2027 budget contains no relief for them.
“Anyone in government has to be able to do the maths”
After a CDU leadership retreat Merz named no date. He wants to fund the cut from budget room once growth proves lasting. Klingbeil disagrees: “We cannot promise something we cannot deliver in the end.” He added: “Anyone proposing things like cutting the electricity tax should also bring proposals for paying for it.” He also rejects the Union’s demand for full compensation for fiscal drag, which would cost about €4bn next year.
Pressure is nonetheless growing. The state premiers want available room used quickly for a lower electricity tax for all, including Manuela Schwesig (SPD) of Mecklenburg-Vorpommern. Holger Schwannecke of the ZDH craft trades federation says the extra revenue removes “the last argument” against the cut. The Greens’ budget spokesman Sebastian Schäfer retorts: “Anyone in government has to be able to do the maths.”
Our assessment, with moderate confidence: a full cut on 1 January 2027 looks unlikely. A partial step, or a later start tied to growth, is more realistic. The key date is the budget committee’s final session in mid-November, with a Bundestag vote planned for the end of the month. For 2027 electricity bills that means no change for now, and even with a cut an average household would save under seven euros a month.
Sources: t-online / dpa, WirtschaftsWoche / dpa, Deutsche Handwerks Zeitung, Cleanthinking, Bundesfinanzministerium
