Taxpayers expect high relief in 2024
The changes to the income tax rate will take effect next year. For many, however, it is still unclear what exactly this means for them. More money? Less money? Will everything stay as it is? A financial scientist presents some calculations - and delivers both good and sobering news.
According to a media report, many taxpayers will have several hundred euros more at their disposal in the coming year. This was reported by the "Handelsblatt" newspaper with reference to calculations by financial scientist Frank Hechtner from the University of Erlangen-Nuremberg. One of the reasons for this is the change in the income tax rate. All changes to taxes and social security contributions as of January 1, 2024 were taken into account for the calculations.
According to Handelsblatt, a single person with an income of 3,000 euros per month will have a total of 172 euros more at their disposal in 2024. A single person earning 5,000 euros per month will have 292 euros more money. The relief will be significantly higher for a family with two children. If one partner earns 2500 and the second 4000 euros per month, the relief amounts to 508 euros. Top-earning families with an income of 16,000 euros have 1600 euros more at their disposal.
"The change to the income tax rate for 2024 will lead to significantly noticeable relief," Hechtner told Handelsblatt. The relief would be even greater if higher social security contributions were not a burden on contributors at the same time. This is because a "not insignificant part" of the relief would be "eaten up again" by higher social security contributions, Hechtner emphasized.
Significant additional burden for singles
Childless taxpayers are particularly affected by higher social security contributions. According to Hechtner, the additional burden for a single person in terms of social security contributions will peak at 722 euros next year. A high-earning family will have to pay a peak of 541 euros more in social security contributions in 2024.
One reason for this is that the average additional contribution rate in statutory health insurance will rise from 1.6 to 1.7 percent for many insured persons in 2024. For high earners, the contribution assessment limits in statutory social insurance will also increase. On the other hand, there will be a number of tax relief measures next year. For example, the basic tax-free allowance, up to which taxpayers do not have to pay tax, will rise from 10,908 to 11,604 euros. The child allowance will be increased from 6024 to 6384 euros.
The federal government is also offsetting so-called cold progression by shifting the tax rates. The term "cold progression" refers to the effect that a wage increase, which at most compensates for the rate of inflation, causes someone to slide into a higher tax rate without their real income increasing.
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The upcoming tax reform, which includes changes to the income tax rate, is expected to provide financial relief to many taxpayers in 2024. However, the financial scientist Frank Hechtner warns that this relief might be partly offset by higher social security contributions, particularly for childless taxpayers who will face an additional burden of up to 722 euros.
Source: www.ntv.de
