Government measures in 2024

Many measures of the government this year benefit employees. Income tax continues to be reduced. Families are supported through an increase in the child allowance and adjustment of family allowance to inflation. Pensioners receive full inflation adjustment up to a pension of 5850 euros per month. Additionally, the electricity price brake has been thankfully extended until the end of the year.

• Reduction of the third income tax bracket to 40 percent: Due to the reduction in July 2023, last year resulted in a "blended rate" of 41 percent. In 2024, the tax rate is 40 percent throughout the year.

• Abolition of bracket creep: This will save taxpayers approximately 3.65 billion euros this year.

• The electricity price brake is extended. Therefore, until the end of the year, the market price only applies for consumption exceeding 2,900 kWh. Until then, consumers receive a subsidy of up to 30 cents.

• Commuting deduction - Since January 1, 2024, all employees are entitled to an annual commuting deduction of 463 euros. If entitled to the commuter allowance, the commuting deduction increases to 798 euros - if the annual income does not exceed 14,106 euros.

• The child allowance - This important tax relief for families with lower incomes is increased from 550 euros to 700 euros.

• Family allowance is increased by 9.7 percent this year.

• Deductibility of donations is extended to the entire charitable sector. This promotes volunteering and strengthens legal certainty.

• Rescue organizations will be better supported for crisis and disaster situations with an additional 22 million euros per year.

• The replacement of fossil heating systems with more climate-friendly alternatives is now covered by federal funding averaging 75 percent. Complete heating system renewal is subsidized for low-income individuals.

• Funding for thermal renovation is increased. Single and two-family homes receive up to 42,000 euros for comprehensive renovation (previously 14,000 euros).

• The VAT on photovoltaic systems is suspended this year and next year. This means a relief of around 650 million euros.

• Climate ticket - Young people receive a nationwide climate ticket free of charge for one year on their 18th birthday.

• Pensions in 2024 are increased by 9.7% for total pension incomes up to 5,850 euros. For total pension incomes above 5,850 euros, pensions are increased by a flat rate of 567.45 euros.

• Since January 1, 2024, the following limits apply: The threshold for minor employment is 518.44 euros gross per month, and the monthly maximum contribution base for social security is 6,060 euros gross per month or 202 euros daily.