The new government's economic program: billions for jobs and investments!

The new government's economic program: billions for jobs and investments!

On May 28, 2025, the first coalition committee of the new black-red government approved a comprehensive emergency program aimed at strengthening the economy and securing jobs. Chancellor Friedrich Merz emphasizes the need for quick action, although many of the measures that have been decided so far remain without concrete timetables.

The program is aimed particularly at the acute weak growth and provides for tax relief and the reduction of bureaucracy. A special fund worth 500 billion euros is intended to serve as a financing instrument for these measures in order to enable a sustainable revival in the economy.

Investment incentives and tax relief

The central elements of the program are the introduction of investment incentives, such as declining depreciation for companies, which is due to come into force between 2025 and 2027. This so-called “Turbo-AfA” makes it possible to immediately claim up to 30% of the acquisition or production costs for tax purposes. Furthermore, corporation tax is to be reduced by one percentage point annually from 2028 until it is reduced by a total of five percentage points by 2032. This measure is likely to benefit large companies in particular and at the same time strengthen local finances by increasing the minimum trade tax rate from 200% to 280%.

Another goal is to increase private investment, with the federal government also aiming to close tax loopholes. The coalition agreement of April 9, 2025 focuses on tax relief for both companies and private individuals. This includes a reduction in income tax in the second half of the legislative period, which is intended to relieve the burden on small and medium incomes in particular.

Changes in the social sphere

The government also plans to link child benefit and the child allowance and to increase the relief amount for single parents. In addition, overtime that goes beyond a collectively agreed full-time position should remain tax-free. Standard old-age pensioners can also earn up to 2,000 euros tax-free.

Some measures such as increasing the commuter allowance to 38 cents, the full refund for agricultural diesel and the abolition of procurement guidelines in the construction industry are due to come into force on January 1, 2026. Furthermore, it is planned to permanently maintain the reduced sales tax rate of 7% on food in restaurants.

Reduction in bureaucracy and other measures

A key concern of the new government is reducing bureaucracy. Among other things, the plan is to reduce the obligation to appoint company representatives by the end of 2025 and to abolish the receipt requirement. From January 1, 2027, there will only be an obligation to use cash registers for companies with an annual turnover of over 100,000 euros.

In addition, a large pension package is being put together, which includes a limit for the pension level at 48% as well as a mother's pension and numerous pension reforms. These should be dealt with in the Bundestag before the summer break, with the first laws possibly being passed as early as July.

How thepioneer.de reports, the government is determined to bring about tangible changes in the economic landscape. The coalition agreement reflects the will to provide new impetus even in challenging times and to set the course for future-oriented development. The detailed tax measures and reforms are a central part of this strategy, as well ecovis-kso.com clarified.