German cabinet approves 2027 income tax reform

Low and middle incomes and families with children get relief: the basic tax-free allowance rises to EUR 12,564 in 2027 (EUR 12,900 in 2028), child benefit to EUR 267 a month (EUR 272 in 2028). Total relief volume is about EUR 10 billion; at the same time a new top rate of 47% is introduced for taxable income above EUR 280,000.

Government bill approved by the cabinet on 2 September 2026; a family with two children is projected to have over EUR 600 a year more from 2027. The parliamentary procedure is still pending.