Basic tax allowance 2024: What is it and how does it affect your taxes?

Basic tax allowance 2024: What is it and how does it affect your taxes?

According to a report by www.badische-zeitung.de, the basic allowance, i.e. the subsistence level that must be available to all working citizens in order to be able to afford essential things, increased in January. For singles the amount in 2023 was 10,908 euros and for married couples it was 21,816 euros. In 2024 it will rise to 11,604 euros or 23,208 euros. Anyone who does not earn more than the basic allowance per year does not have to pay income tax. If you earn more, your wages or salary will only be taxed above this limit.

The increase in the basic tax allowance has a direct impact on income tax, as income is only taxed from the new amount. For the year 2024, this means that income will only be taxed from the 11,605th euro, or for married couples from the 23,209th euro. This means that all employees should have at least 967 euros net per month - that is 58 euros more than in 2023. Since 2013, the basic allowance has been increased annually, which leads to continuous relief for employees.

By adjusting the basic tax allowance, taxpayers get more money in their pockets because they only have to pay taxes when their income is higher. This can help strengthen purchasing power and increase consumer spending. In addition, the adjustment of the basic tax allowance can be viewed as a form of income redistribution, as low earners in particular benefit from the tax relief.

The ability to further reduce taxable income through business expenses or other deductible expenses can enable taxpayers to save taxes or, ideally, receive a tax refund. Overall, the adjustment of the basic tax allowance for 2024 can have a positive impact on the financial situation of citizens.