With the end of 2021 coming ever closer, many new regulations have come into force. Act now to take advantage of the changes from January 1, 2021!
More Kindergeld (child benefit)
Good news for families - from January 2021, child benefit will increase by 15 euros per child:
- 219 euros child benefit for the first two children
- 225 Euro child benefit for the third child
- 250 Euro child benefit for the fourth child
Child benefit is generally available for all children up to the age of 18, for children in education up to the age of 25 and for unemployed children up to the age of 21.
Higher tax-free allowance for children.
For 2020, the child allowance is 5,172 euros. For 2021, it is to increase by 576 euros. In addition, there is a tax-free allowance of 2,640 euros for the care, education and training needs of children. In the income tax assessment, both allowances will be added together and the child tax allowance will be increased from 7,812 euros to 8,388 euros in 2021 (per child for both parents) (source: Federal Ministry of Family Affairs).
Solidarity surcharge ("Soli" or Solidaritätszuschlag) is now abolished
For 90 percent of current payers, the solidarity surcharge will be completely eliminated from 2021. The exemption threshold, up to which no solidarity surcharge is due, will be raised from today's €972 to €16,956 of the tax payment, so that no soli will be due in future up to a taxable income of €61,717.
Two examples: A married couple with two children and two incomes (annual gross: 66,000 euros and 54,800 euros) will save almost 1,000 euros a year from 2021 due to the complete elimination of the soli. For a single person without children with a gross wage of 31,200 euros a year, the savings will be a good 200 euros a year (source: www.bundesregierung.de).
Increased Home Builder's Premium: More support in funding your own home
With the housing subsidy, the state is increasingly promoting building society savers who want to buy, build or modernise a property. The funding itself and the income limits were increased significantly on January 1, 2021. For singles, the maximum amount subsidised has been increased from EUR 512 to EUR 700 per year and the maximum taxable income has been increased from EUR 25,600 to EUR 35,000 (double the amounts apply to married couples). The subsidy rate has been increased from 8.8% to 10%, so that, for example, a married couple who is within the income limits can receive around EUR 1,000 from the state in 7 years (source: Deutsche Bausparkasse Badenia AG).
Minimum wage increased
The statutory minimum wage will increase on January 1, 2020 from 9.35 euros gross per hour to 9.50 euros gross per hour. In further steps, it will be increased in stages: on July 1, 2021 to a gross EUR 9.60, on January 1, 2022 to a gross EUR 9.82 and on July 1, 2022 to a gross EUR 10.45 (source: Federal Ministry of Labor).
More money for single parents
Those who raise children alone will benefit from a higher tax allowance in 2021. That increases from 1,908 euros to 4,008 euros per year. There is an entitlement to the exemption if one parent lives with at least one child who receives child benefit and there is no household community with another adult (source: www.familienportal.de).
Retirement provision is more tax deductible
From January 1st, expenses for old-age provision can be better deducted for tax purposes, for example contributions to statutory pension insurance or to professional pension funds. A maximum amount of 25,787 euros (2020: 25,046 euros) applies to the consideration of special expenses in 2021 (source: Bund der Steuerzahler).
Increase in the commuter allowance
Those who have a longer commute to work will be able to deduct more money from their tax from next year. With a commute of at least 21 km, it increases by 5 cents per kilometer covered to 35 cents / kilometer. For those who have a commute of less than 21 kilometers, the commuter allowance remains unchanged at 30 cents / kilometer (source: Bundesverband Lohnsteuerhilfevereine).
When calculating the vehicle tax, the CO2 emissions are gradually taken into account more and the vehicle tax is increased accordingly. However, this only applies to newly registered cars in 2021 (source: Federal Ministry of Finance).
Practical exam for all driving license classes
Those who take the practical driving test from January 2021 can now expect that it will take around ten minutes longer. Among other things, the catalog of tasks for the driving test will be expanded and an electronic test report will be made while driving. The goals are more objectivity and improved feedback for the learner driver (source: German Road Safety Council - Deutscher Verkehrssicherheitsrat).
EU-wide plastic ban from July 2021
Plastic increasingly pollutes the environment and the oceans. From July 3, 2021, plastic cutlery, plastic dishes, straws, styrofoam containers for warm meals to take away or even cotton swabs made of plastic may no longer be produced across the EU (source: www.bundesregierung.de).