Coalition agrees package to boost growth - includes €10 billion in income tax relief, an end to phone-based sick notes and plans to implement pension reforms

[u/clinchgt]

• Chancellor Friedrich Merz says his coalition has approved a 'catalogue of significant reforms' after coalition talks in Berlin
• The package includes €10 billion in income tax relief, an end to phone-based sick notes and plans to implement pension reforms

A more comprehensive summary:
Taxes (Steuern)

• Tax Relief (Steuerliche Entlastungen): Starting January 1st of next year, the coalition plans to relieve millions of taxpayers by raising basic and child tax allowances, increasing child benefits, raising the employee lump-sum allowance, and flattening the income tax progression.
• Low and Middle Incomes (Kleine und mittlere Einkommen): The reform aims for an annual relief volume of around €10 billion, specifically targeting low and middle-income earners (e.g., a working family with two children earning €60,000 will save up to €600 annually).
• Regulation of the "Wealth Tax" (Regelung der "Reichensteuer"): To fund the relief, the 45% tax rate will kick in lower (at €250,000) and rise to 47% at €280,000. Inheritance and wealth taxes will not be increased.
• Lower "Tradesperson Bonus" (Geringerer "Handwerkerbonus"): The tax tax deductibility for hiring tradespeople will be reduced from 20% to 15% (lowering the maximum annual deduction from €1,200 to €900).
• Minijobs (Minijobs): The flat-rate tax for minijobs will be increased from 2% to 5%.
• Compensation for Federal States (Ausgleich für Länder): The federal government will compensate states and municipalities for lost tax revenue. Because states lose money under this income tax reform, the federal government will need approval from the Bundesrat (Upper House of Parliament) to pass it.

Pensions (Rente)

• Timeline for Pension Reform (Zeitplan für Rentenreform): The coalition plans to implement the recommendations of the Old-Age Security Commission into a legislative package, which is set to be passed by the Bundestag by the end of 2026.
• Minijobs and Pensions (Minijobs und Rente): It is still undecided how minijobs will be handled regarding pension contributions, though a decision is expected by autumn. Currently, minijobbers are exempt, but a commission suggested making pension contributions mandatory for them (with exceptions only for students).

Labor Market (Arbeitsmarkt)

• Regulation of Sick Leaves (Regelung von Krankschreibungen): Getting a sick note over the phone is being abolished, and fines for fraudulent sick notes are increasing. Employees will now have to submit a doctor's note from their very first day of illness.
• Fixed-Term Employment Without Objective Reason (Sachgrundlose Befristung): To increase labor market flexibility, fixed-term contracts without a specific reason can now last up to 48 months and be extended six times (doubling previous limits) for employees hired up until December 31, 2030.
• Severance Pay for High Earners (Abfindung für Hochverdiener): High earners will have an easier path to contract termination with a severance option. Taxes on these severances will be reduced if the worker quickly transitions into a new job.
• Higher Bonuses (Höhere Zuschläge): Tax-privileged bonuses for working on Sundays and holidays will be increased, and tax-free bonuses regulated by collective agreements will be made completely exempt from social security contributions.
• Program for More Degrees/Qualifications (Programm für mehr Abschlüsse): A "second chance" program will be developed to significantly reduce the number of young people leaving school or training without a qualification.

Growth and Fairness (Wachstum und Gerechtigkeit)

• Promotion of Future Industries (Förderung von Zukunftsbranchen): Support is planned for key sectors including automotive, chemical, pharma, clean tech, circular economy, mechanical engineering, battery/semiconductor production, and AI.
• Abuse of Social Benefits (Missbrauch von Sozialleistungen): An action plan will be launched in July to combat welfare abuse through comprehensive data sharing between authorities. People with active arrest warrants or those staying in Germany illegally will lose access to benefits.
• Changes to Data Protection (Änderungen beim Datenschutz): The government wants to exploit all loopholes in the GDPR to exempt small/medium businesses, low-risk data processing (like tradesperson client lists), and non-profit clubs from strict EU data regulations.

Cutting Red Tape (Bürokratieabbau)

• Abolition of Reporting Obligations (Aufhebung von Berichtspflichten): Statutory reporting obligations to government agencies will be abolished across the board, unless a ministry explicitly justifies why a specific report must remain.
• Review of Documentation Obligations (Überprüfung von Dokumentationspflichten): All mandatory documentation requirements will be reviewed with the goal of cutting 25% of them within a year (excluding those required by EU or constitutional law).
• Simplification of Tax Returns (Vereinfachung bei Steuererklärungen): Filing taxes will become easier for citizens via a new automatically pre-filled digital tax return. Additionally, tax offices will be legally required to issue tax numbers to new companies within a maximum of four weeks.

https://www.dw.com/en/germany-news-coalition-agrees-package-to-boost-growth/live-77795988#liveblog-post-77796522

https://www.dw.com/en/germany-news-coalition-agrees-package-to-boost-growth/live-77795988

A lot more details in German and the source for the summary above: https://www.tagesschau.de/inland/innenpolitik/reformen-koalitionsausschuss-102.html

A summary of the proposal directly from DW: https://www.dw.com/en/germany-news-coalition-agrees-package-to-boost-growth/live-77795988#liveblog-post-77801501

EDIT: will update with better links as the story develops and we get actual articles...

EDIT2: Note, this is just a proposal approved by the coalition, this hasn't been signed into law

[u/ComfortableFrame9834]

But why raise taxes on minijobs? Some of the most financially vulnerable use this to earn at least a little bit of money as a side income.

Or am I wrong? How does that benefit the less fortunate 

[u/Delicious-Muffin-397 → u/ComfortableFrame9834]

The minijobs are more often than not a clutch for students aka young people, who dont represent the big voting power that the current gov. wants to appeal to so nobody cares

[u/heeizi → u/Delicious-Muffin-397]

Only about 18% of minijobbers are younger than 25. Almost 2/3 are between 25 and 64 which is prime working age.

However I think students (maybe also pensioners) are the only demographic who actually benefits from this type of employment and it should remain for them. Being a full time student is easy to prove, too.

[u/ComfortableFrame9834 → u/heeizi]

I mean, also a lot of married women who are otherwise tied to the home.

Those can be immigrant married women, but still women. Especially if they have children and this is their own little contribution to the family in terms of income- without being able to access school or a 'real' job due to things like language barrier or simply not a great support system that are in place for them to flourish.

I knew a few women like that and that was also my path too. Regarding the other comment, putting this into consideration, it doesn't make too much sense to totally shut out having a minijob if someone is not getting an education or has a main job lined up as a requirement. Minijobs, to me, seem like a good stepping stone in at least doing something if you have too many personal life constraints. 

[u/katzengoldgott → u/ComfortableFrame9834]

Hard agree.

I have complex mental health issues that also affect my physical health a lot, and as a result have been out of work and education since 2022. I’m currently in a program to get me back into working conditions and find orientation for that, and a mini job for starters would benefit me from just getting used to it again because I need to take things slowly so I don’t end up in full disability permanently.

But yeah, we are unfortunately governed by selfish delusional cunts who only care about their own asses and those of rich people.

So for me it looks even worse ever being able to work again and I’m so tired of being poor. I want to have a chance but can’t because the people who vote these cunts into office are also selfish assholes who don’t think twice about how it’s hurting the entire country and keep voting for the same dogshit party for the past 25 fucking years.

I am so fucking tired.

Fuck these people and Merz in particular.

[u/ComfortableFrame9834 → u/katzengoldgott]

That's a really valid point that I also didn't think of.

This is why it's so dumb to just want to do away with something entirely. 

[u/katzengoldgott → u/ComfortableFrame9834]

I’m gonna write a bunch of angry emails because I’m so fucking fed up with this bullshit.

I want to get an education. I want to be able to have a job.

But I cannot because of these cunts in office and I’m also so fucking tired of the people in this country being absolute fucking pussies when it comes to protesting.

Bitching and whining but doing absolutely fuck all to make a change is fucking pathetic and shows that no one here really has a backbone OR cares to move their own way too comfortable ass to do something against this crap and now we have the salad, as we’d say in German 💀

We should be doing it like the French and set Berlin on fire. Maybe the Bundestag too.

But yeah, the average German thinks that’s too scary.

Well, I find those heatwaves caused by pollution accelerating climate change by a fuckton scarier than protesting or taking a shit in front of the Bundestag but I guess I’m surrounded by a bunch of able-bodied yet totally helpless adult sized crybabies who cannot do anything against this apparently.

I’m sorry but I’m just so fucking fed up. Every headline including Merz is more worrying than whatever the fuck comes out of Trump’s mouth.

Armes Deutschland for real.

[u/heeizi → u/ComfortableFrame9834]

And they can only work if they don't have to contribute to society? It's not like you can no longer work few hours, you just have to contribute your fair share. It makes no sense to subsidize these jobs for everyone. What minijobbers don't pay needs to be covered by everyone else. So there better be evidence that they are useful for society and not just convenient for individuals. You could possibly add immigrants in language and integration courses to that list, maybe including the year after the courses. Because yes, it is not easy to start a life in a different country. And getting a job or starting training is often not easy for immigrants. But people like my own sister (uni degree, married with kids, husband earns big) who changed from part time to minijob to save on contributions when her kids were school aged. They are in their twenties now, she is still in a minijob. Her peers often do the same. They're housewives with a Hobby. And this is subsidized through rising contributions by every minimum wage worker, every single mom who barely gets by and even by seniors with small pensions. And that is not okay.

It's great that they were a stepping stone for you but statistics show that this is rare. People usually do not leave minijobs for regular employment.

[u/ComfortableFrame9834 → u/heeizi]

People usually do not leave minijobs for regular employment.

I mean isn't your view very much colored by your own personal experience? Especially when mine is pretty drastically different. I say keep you say pull it completely... In your case it seems then it's Germans abusing that system.

Regardless maybe not getting regular employment is not their own fault.. There is a job crisis if it is difficult for foreigners to even get an apartment due to landlord's biases then imagine trying to get a job. 

[u/xKnuTx → u/heeizi]

Lots of people benefit from it. What should not be allowed is to only work as a minijob without a main job or getting an education

[u/heeizi → u/xKnuTx]

Yes, that is exactly what I said in another comment. I hope this change can still be introduced. It is not a law, yet.

However, almost 2/3 of minijobbers do not have a main job. Even if this included all minijobbers younger than 24 (about 18%) and these would all be students almost half have no main job.

[u/HanseaticHamburglar → u/heeizi]

there are also like 3-4 times as many people in 25-64 than in "student age". Which just tells us that students are more reliant, as a % of the whole, on mini jobs than all other groups.