We need genuine tax relief, not fiscal sleight of hand

German Employers’ President Dr Rainer Dulgeron the Cabinet Decision on Income Tax Reform: 

We need genuine tax relief, not fiscal sleight of hand

Berlin, 2 September 2026. “Germany needs a tax system that makes work more attractive and facilitates investment. This draft achieves the remarkable feat of doing the opposite while still presenting it as tax relief. Germany has no time for fiscal sleight of hand. We need genuine tax relief.

The 45 per cent tax rate is set to apply sooner, a new 47 per cent rate is being introduced, and the flat-rate tax on mini-jobs is being increased. This would have serious consequences not only for employees. Income tax is also a business tax: many SMEs pay tax on their profits through the income tax system. Every additional euro taken away is a euro missing where Germany urgently needs it now, for investment, innovation and new jobs.

The Bundestag must therefore turn this draft into a reform worthy of the name: with lower tax rates, a flatter tax structure and full compensation for fiscal drag. Those who work and create jobs must feel the benefits of tax relief, not merely hear about them in the media.”