Germany Plans to Abolish Tax Classes III and V for Married Couples by 2030
The Federal Ministry of Finance, led by Christian Lindner of the Free Democratic Party (FDP) in Germany, has put forth a legislative proposal to eliminate tax classes III and V for married couples starting in 2030. Currently, these two tax classes are commonly selected by couples with significant income discrepancies when filing joint tax returns. Choosing to file jointly provides couples with a tax advantage known as the 'Ehegattensplitting,' resulting in an annual tax savings of approximately 25 billion euros for all married couples. The proposed removal of these tax classes will not alter the overall tax advantage provided by the splitting method, but rather how the benefits are distributed. Under the new plan, all couples will be categorized under tax class IV with an adjusted factor, ensuring a fairer distribution of the tax burden based on respective incomes. This aligns with Lindner's goal of creating a more equitable taxation system for married couples in Germany, offering them the option that is already available today.
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