Tax break for high earners in 2021

Calculations show that the government's tax plans will benefit well-off married couples and parents.

Just do it on Elster.
Just do it on Elster.imago/Bernhard Classen

Berlin-Thanks to the government's plans to scrap the Soli surcharge and raise the child benefit, high-earning married couples with kids are expected to save thousands of euros in taxes in 2021, which happens to be an election year.             

Frank Hechtner, a finance scientist at the Friedrich-Alexander University of Erlangen-Nuremberg, made some calculations on how different kinds of taxpayers could save money, Handelsblatt reported.

In one of Hechtner's examples, a couple with two children, where one partner earns €9,500 before tax per month and the other partner €4,000, would save a whopping €2,342 per year. The tax bill of a married couple where one partner earns €4,000 per month and the other €3,000, will be reduced by €1,035 according to Hechtner.

Single parents with one child and gross earnings of €3,500 per month will have an additional €448 in their pockets.

Meanwhile, a single without kids and a monthly income of €6,000 will save €1,040 per year, while a childless single who earns €3,000 can expect €368.

The partial abolition of the Solidaritätszuschlag, the solidarity surcharge levvied to pay for investments in former East Germany, accounts for the lion's share of next year's tax relief. As of 1 January 2021, 90 per cent of taxpayers will no longer have to pay the Soli – calculated as 5.5 per cent of a taxpayer's income tax.

An €15 increase in the child benefit per month to €219 in January 2021 and a corresponding increase in the deduction for children should also have a positive impact on parents' tax burden.