Germany’s governing parties have struck compromises on the 2027 federal budget: housing benefit (Wohngeld) stays as it is, but the electricity tax for households will not be cut for now. Conservative parliamentary leader Thorsten Frei, SPD parliamentary leader Matthias Miersch and CSU group leader Alexander Hoffmann announced the deal late on Wednesday (as of 12 November 2026).
Negotiators found no way to pay for the tax cut, AFP reports; Handelsblatt puts the gap at about €5 billion. Frei called that “regrettable” but said the cut remains the Union’s top priority. We set out what a cut would be worth on Wednesday evening: Germany’s electricity tax: what a cut for everyone would be worth (earlier coverage).
What stays as it is for households
According to Deutschlandfunk, the electricity tax stays at 2.05 cents per kWh; the EU minimum is 0.1 cents. So far it has been cut only for manufacturing and for agriculture and forestry. Anyone who expected the coalition agreement’s “cut for everyone” will have to wait. For orientation, our own calculation: at 3,500 kWh a year, the full 1.95-cent difference would be worth about €68 annually before VAT, or just over €80 including VAT.
On the other side of the ledger, AFP reports that planned Wohngeld cuts are off the table and a child supplement continues. Handelsblatt names it as the Kindersofortzuschlag: about three million children at risk of poverty keep getting €25 a month. Parental allowance (Elterngeld), per Handelsblatt, stays at 14 months; the planned cut to twelve was withdrawn. The replacement rate changes, though: 80% for the first four months per parent, then 50% instead of 65%. Only Handelsblatt reports that detail so far; we will update once the budget committee publishes its decisions.
Less welcome for recipients: basic income support (Grundsicherung) gets another zero round in 2027 for about seven million people, Handelsblatt says; Deutschlandfunk reports no increase until summer 2028. The Union had pushed for cuts of five to seven euros but did not prevail.
Other decisions
The sugary-drinks levy arrives in 2028 instead of 2027, with three tiers by sugar content instead of two. The plastic tax is dropped for now, as is the planned rise in sparkling-wine tax; alcopops will be taxed up to 15% alcohol. There is no full compensation for “bracket creep” in income tax yet; Frei said, per AFP, that relief for 2027 could come retroactively. Miersch put the compromises at about €2 billion.
How long this holds is open. Finance Minister Lars Klingbeil is open to the cut, AFP says, but sees no room in the 2027 budget. Frei first named 1 January 2028, then said, per AFP, that relief should ideally take effect as early as next year. Handelsblatt puts the 2028 budget gap at about €25 billion. Our assessment: a cut for everyone by New Year is unlikely; 2028 is more realistic, and only if financing is found.
The Bundestag budget committee is due to finish the budget in its final “Bereinigungssitzung” overnight into Friday; further changes remain possible there, according to the Bundestag. The full Bundestag is due to pass the budget at the end of November.
Sources: Handelsblatt, AFP, Deutschlandfunk, Bundestag
