German Federal Cabinet Approves Draft Income Tax Reform Act 2027

The German Ministry of Finance has published the Draft Income Tax Reform Act 2027 (Einkommensteuerreformgesetz 2027), which was approved by the Federal Cabinet on 2 September 2026. The main measures are summarized as follows:

• The current 45% tax rate bracket threshold will be reduced to EUR 250,000, and a new top tax rate of 47% will be introduced on income exceeding EUR 280.000
• The standard employee lump-sum deduction for income from non-self-employed work will be increased from EUR 1,230 …