The federal government has passed another tax relief law for citizens and entrepreneurs to cushion the rising energy prices. A one-off energy allowance of EUR 300 is to be paid out to all employees who are subject to income tax. Added to this is the increase in the distance allowance, the basic allowance and the employee allowance. The simplifications apply retrospectively from January 1, 2022.

All taxpayers with income from commercial operations, self-employment, agriculture and forestry, and also all employees who are employed in tax brackets I to V can receive the energy flat-rate. However, the energy flat rate is itself subject to income tax. Parents will also receive a one-time child bonus of EUR 100 per child in July 2022, which will be automatically paid out by the responsible family benefits office.

In an earlier relief package, the federal government decided on indirect relief, which also applies retrospectively to January 1, 2022. The employee lump sum for income tax will be increased by EUR 200 to EUR 1,200. The basic allowance for income tax increases by EUR 363 to EUR 10,347. The distance allowance for commuters will be increased from 35 to 38 cents per kilometer from the 21st kilometer until 2026.

If you have further questions about the Tax Relief Act, please contact the experts at the Altehoefer firm for international tax advice.