What’s really nasty is that if you’re one of the lucky ones to get a few percent more pay, that doesn’t help much when inflation is eating away at everything.
Now, you might say that’s better than no raise, but that’s not always true. Because if you slip into a higher tax class due to higher income, the state will ask you to pay more.
The Inflation Compensation Act aims to act against this cold progression effect. The 48 million Germans mentioned are the taxable citizens who will be relieved.
These include employees, retirees, self-employed and entrepreneurs. However, particularly high incomes are deliberately excluded, to which the wealthy tax rate of 45% applies.
Speaking of tax returns: under the new law, many people should no longer have to submit tax returns at all.