Solidarity surcharge to be discontinued gradually
In future the solidarity surcharge will be discontinued for the vast majority of people who pay it today. The German government has initiated a regulation which will ease the financial burden on 35.5 million tax-payers to the tune of almost 11 billion euros a year.
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Solidarity surcharge features on a wage slip. The German government has announced that the surcharge will be largely discontinued.
Photo: picture alliance/imageBROKER
The solidarity surcharge of 5.5 per cent is levied on income tax and company tax. It is only payable if income tax is above the tax exemption limit.
What’s new?
For 90 per cent of those who pay the solidarity surcharge today, it will be discontinued entirely as of 2021 – as laid out in the coalition agreement. The tax exemption limit up to which no surcharge is payable will be raised from 972 euros today to 16,956 euros, meaning that in future no solidarity surcharge need be paid on a taxable income of up to 61,717 euros.
A so-called mitigation zone follows this limit. As is already the case today, this will ensure that tax-payers are not charged the solidarity surcharge on their full taxable income. This will benefit another 6.5 per cent of surcharge payers. The mitigation zone applies to taxable income of up to 96,409 euros. For married couples this sum is doubled.
Two examples: A married couple with two children and two incomes (gross annual incomes of 66,000 euros and 54,800 euros) will pay almost 1,000 euros less a year because they will pay no solidarity surcharge at all. A single earner with no children, and a gross annual salary of 31,200 euros, will save a good 200 euros per year.
This decision must now be approved by the German Bundestag.