Germany's federal government has approved a tax reform aimed at reducing the burden on low-income earners and families. The reform increases the basic tax-free allowance and slightly flattens the income tax rate for those earning up to €70,600 annually. Child benefits will also increase incrementally over the next two years. However, critics argue that these changes do not fully address 'cold progression,' where rising wages fail to outpace inflation and increased taxes reduce disposable income. The reform includes measures such as limiting deductions for certain expenses like handymen's invoices and raising the top tax bracket to 47% for incomes above €280,000. While the finance ministry provides examples showing potential savings for individuals and families, the economy ministry and the DIW warn that the reform does not eliminate cold progression entirely.
Bias read (Center): The article presents both the government's claims about the tax reform benefiting lower-income groups and criticisms from the economy ministry and DIW regarding incomplete relief from cold progression. It avoids overtly biased language and provides balanced perspectives from different stakeholders.





