Klingbeil announces massive tax cuts for companies!

Klingbeil announces massive tax cuts for companies!

Federal Finance Minister Lars Klingbeil (SPD) is planning comprehensive tax cuts to support the German economy. These measures are included in a bill that also requires the approval of the Bundestag and Bundesrat. The time reported that the aim of these tax reliefs is to create long-term planning security for companies and to provide incentives for investments. The planned reduction in corporate tax from the current 15 percent to 10 percent by 2032 is to take place gradually.

The key measures also include the “investment booster”, which provides for special depreciation on machines of up to 30 percent for the years 2025, 2026 and 2027. New depreciation options for electric cars are also planned. Companies that purchase electric cars can expect 75 percent depreciation in the year of purchase, followed by further depreciation steps over four years. A special regulation for purchases between July 2025 and December 2027 is intended to support these initiatives.

Financial impact of tax cuts

The planned tax cuts have a significant volume that will increase over the years. Savings of 2.5 billion euros are expected for 2025, increasing to 11.3 billion euros by 2029. At the same time, these measures will reduce government revenue over time. NWB Expert Blog explains that the revenue losses for the state should be 630 million euros in 2025 and 4 billion euros in 2026. In 2029 the loss could even reach 17 billion euros.

The effects of the tax cuts are distributed across the federal, state and local governments. Business associations have already pointed out the weak economic development in Germany, which is reflected in the stagnation of gross domestic product this year. High energy costs, long planning and approval procedures as well as rising social security contributions were identified as international location disadvantages.

Further tax adjustments

The new regulations on corporate taxation, which were published in the coalition agreement between the CDU/CSU and SPD on April 9, 2025, also include an improvement in the option model under the Corporation Tax Act and the retention benefit. In addition, tax support for research will be expanded to specifically support research and development. However, it remains unclear whether the states in the Bundesrat will agree to the planned tax cuts.

In summary, it can be said that the planned tax policy changes represent a significant step towards improving the framework conditions for companies in Germany, while at the same time the financial consequences for the state and its constituent states must be closely monitored.