Minimum income level remains tax-free


The Federal Government has adopted the 12th Minimum subsistence level report: It stipulates, among other things, that in 2019 and 2020 the subsistence minimum will rise due to higher costs of living and will remain tax-free as in the past.


The term subsistence minimum refers to the financial means required to cover material needs in order to ensure survival.


The basic tax-free allowance for adults, which currently stands at 9,000 euros, will rise to 9,168 euros in 2019 and 9,408 euros in 2020, while the child allowance will rise from 4,788 euros at present to 4,896 euros (2019) and 5,004 euros (2020) respectively. The second child allowance component "allowance for care, education and training" remains constant at 2,640 euros.


The basic allowance is the annual amount up to which the income does not have to be taxed. The increase in the child allowance reflects the increase in child benefit agreed in the coalition agreement.


At the same time, the tax progression report adopted today will lower the income tax rate in order to compensate for the so-called "cold progression". This means that less tax is levied, especially on lower wages and incomes.


The inflation rate indicates how the prices for private consumption expenditure change within a year. This is why it is also referred to as "inflation" or "rate of inflation". If wage increases only compensate for inflation, people will not have more money available despite higher wages. When this happens, one speaks of "cold progression".


Source. Newsletter Federal Government Current v. 02.11.2018 Newsletter Federal Government News v. 02.11.2018