Germany's New Tax Relief Pact: Easing the Inflation Burden

Germany's Social Democrats, Greens, and Free Democrats have reached a tax relief agreement worth over 11 billion euros for 2025-2026, including higher child benefits. The deal aims to reduce inflation's impact without new bureaucratic hurdles, as former finance minister Christian Lindner champions financial relief for citizens.

Germany's three major parties—the Social Democrats, Greens, and Free Democrats (FDP)—announced Friday that they have hammered out a new agreement for income tax relief and increased child benefits. This comes after their previous coalition fell apart last November.

The FDP, having moved to the opposition following the ousting of their leader Christian Lindner as finance minister, had persistently sought measures to mitigate inflation's impact on taxpayers without adding bureaucratic complexity. The new draft bill promises tax relief exceeding 11 billion euros for the years 2025 and 2026 and aims to raise monthly child benefits to 255 euros.

Lindner hailed the agreement on social media platform X, lauding the absence of "unnecessary and irrelevant bureaucracy," leading to what he described as "pure financial relief for citizens." The proposal is set to be reviewed by Germany's lower house, the Bundestag, next week, alongside the enhanced child benefit plan.

(With inputs from agencies.)