Tax expert does the math: This is how much more of your salary you will have in 2024

Tax relief - Tax expert does the math: This is how much more of your salary you will have in 2024

It is currently unclear how the chaos surrounding public finances will continue. But there is also good news for private households when it comes to money: Various tax relief measures for employees will come into force in 2024. They will ensure that many families will have several hundred euros more in their pockets for the same salary than this year.

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Financial scientist Frank Hechtner from the University of Erlangen-Nuremberg has calculated who will be relieved by how many euros. The evaluation, which was first reported in the Handelsblatt newspaper and which the tax expert made available to stern , shows that taxpayers will have more in their wallets in 2024 even if one takes into account the fact that social security contributions will rise sharply at the same time.

For example, a childless single person with a gross monthly income of €4,000 will have a net €225 more per year at their disposal than in 2023. A family with two children, where both parents earn €4,000, will be relieved by €620. For very high incomes, the relief amount can rise to 1,600 euros.

Tax relief, but rising social security contributions

Hechtner 's calculations take into account not only income tax and the solidarity surcharge, but also social security contributions. Specifically, the calculations include the following reductions and reductions compared to 2023:

• The basic tax-free allowance, up to which no tax has to be paid at all, increases from €10,908 to €11,604.
• The other key values of the tax rate will also change. This means that the tax rates that apply today will only apply to slightly higher incomes in 2024 (only the "wealth tax rate" will not be reduced).
• The child allowance will increase from 3012 to 3192 euros per parent.
• The exemption limit for the solidarity surcharge for top earners will be increased.

On the other hand, the increase in the contribution assessment limits for statutory pension and unemployment insurance as well as health and long-term care insurance will have a negative impact. In addition, the additional health insurance contribution will rise from 1.6% to 1.7% on average. The increase in long-term care insurance and the new surcharges for those without children (and reductions for children), which will apply in the second half of 2023, are also included in the year-on-year comparison. The calculations do not take into account income replacement and transfer payments, social benefits and church tax.

Some of the tax relief will therefore be eaten up by higher social security contributions. Nevertheless, according to Hechtner's calculations, taxpayers usually end up with more in their pockets. How much more depends on income and family situation. Childless people benefit less overall than families with children, as the following tables show.

Table: Annual relief in 2024 (compared to 2023) with single assessment

Source: Prof. Dr. Frank Hechtner, University of Erlangen-Nuremberg

The tables show that the specific amount of tax relief increases as income rises (at least up to the top tax rate). This means that those who pay more tax also receive more relief. According to Hechtner, the negative individual value for single parents can be explained by the increase in the mini-job threshold and the associated increase in social security contributions in the sliding zone. The table for the relief for families refers to a couple with two children who are jointly assessed for tax purposes and receive child benefit or child allowances accordingly.

Table: Annual tax relief 2024 for families with two children (split rate)

Source: Prof. Dr. Frank Hechtner, University of Erlangen-Nuremberg

In addition to these tax cuts that have already been decided, there could be more in the new year. Finance Minister Christian Lindner has declared that he also wants to increase the basic tax-free allowance and child tax-free allowance once again due to the higher citizen's allowance. This is to apply retroactively from January 1, 2024. According to Hechtner, the planned increase in the basic tax-free allowance would lead to a further reduction of 33 euros.

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1. Financial scientist Frank Hechtner, from the University of Erlangen-Nuremberg, has calculated that due to the tax relief measures being implemented in 2024, a childless single person with a gross monthly income of €4,000 will have a net €225 more per year.
2. According to Hechtner's calculations, taxpayers will still have more in their pockets in 2024, despite the fact that social security contributions will rise sharply at the same time.
3. The headlines in various newspapers have been filled with news about the tax relief measures, with Frank Hechtner's calculations being a key focus, providing relief for many families across the country.

Source: www.stern.de