Tax relief planned: Federal government is focusing on growth!

Tax relief planned: Federal government is focusing on growth!

Berlin, Deutschland - The federal government has big plans to boost the economy. On June 1st, 2025, Finance Minister Lars Klingbeil (SPD) presented a draft law that focuses on tax relief and investment incentives to help the economy from the recession. The draft includes a gradual reduction in corporation tax from 15 % to 10 % by 2032, while extended depreciation options for electric vehicles and machines are also in prospect. The draft law stipulates that companies will be able to deduct 75 % of the acquisition costs for new electric cars in the year of the purchase, which applies in particular to vehicles that are bought between July 2025 and December 2027.

The business associations in Berlin and Brandenburg (UVB) welcome the desired measures. UVB board member Alexander Schirp was positive about the new depreciation options. According to the plans, the gross list price limits for the company car taxation from 70,000 euros are increased to EUR 100,000 and tax research funding increases. These measures should help to improve Germany's competitiveness and enable rapid growth of investments.

financial effects and municipal concerns

The tax relief will also cause financial less income of a total of almost 46 billion euros for the federal budget. According to the current draft law, the tax reductions are distributed as follows:

• 2025: 2.5 billion euros discharge for companies
• 2026: 8.1 billion euros
• 2029: 11.3 billion euros

The Greens parliamentary group has already expressed concerns about the financial effects on the municipalities and demands financial compensation. Co-party leader Brantner warned of possible restrictions on municipal institutions, which could endanger the acceptance of the reform plans. The Greens are calling for a comprehensive discussion about long -term financial consequences.

The competition in an international context

In addition to tax relief, the reform of corporate taxation in Germany is also an essential point. The DIHK points out that corporate taxation in Germany is currently around 30 percent, which is high in international comparison. The OECD average is almost 23 percent and the EU average is around 21.1 percent. In view of these figures, numerous companies have shifted their investments abroad because they offer locations more attractive conditions.

medium-sized companies and start-ups continue to fight with bureaucratic hurdles and uncertain framework conditions. These factors make it difficult to generate capital for growth projects. In view of the reforms since the last major tax reform in 2008, there is considerable need for action from the DIHK's point of view. Suggestions to improve the tax framework includes, among other things, to reduce corporate tax to a maximum of 25 percent and to put up the removal of the solidarity surcharge to relieve medium -sized companies.

The current legal situation is discussed at the upcoming meeting in the Bundestag, whereby the Federal Council's approval is required. The plans could be of fundamental importance for the economic recovery and building up new capacities as well as jobs.