Business · Economy · 8 hrs ago
Germany expects higher tax revenue but no extra budget room in 2027
Germany expects to collect €10.9 billion more in taxes in 2027 than it forecast in May, as the economy performs better than expected.
The increase covers the federal government, states and municipalities; the federal government alone is forecast to receive €4.1 billion more.
Finance Minister Lars Klingbeil says the extra revenue will not give the government more budget room next year, though it should mean no new funding gaps.
The improved outlook reflects stronger growth, exports and public investment in infrastructure and defence.
The tax increase is not enough to fund new spending plans, including a proposed cut to household electricity taxes.
The forecast also sets out a modest rise in total tax revenue through 2030 compared with the May estimate.
Parliament is due to approve the 2027 federal budget by the end of November, while coalition parties continue to debate spending and tax plans.
Germany’s latest tax forecast predicts higher revenue in 2027, but Finance Minister Lars Klingbeil says it will not create new room in the federal budget.
The forecast puts 2027 tax revenue for the whole state, including federal, state and local governments, at just over €1 trillion.
Sources differ on the federal government’s projected increase for 2027: DW and t-online report €4.1 billion, while WirtschaftsWoche reports €3.3 billion.
For 2027, the forecast for all levels of government is about €10 billion higher than the estimate made in May.
The figures are prompting debate within the governing coalition over tax cuts, spending and budget plans.
- Who
- Germany’s federal, state and local governments. Finance Minister Lars Klingbeil presented the government’s assessment.
- What
- A tax forecast projects higher revenue, but Klingbeil says it will not give the federal budget new fiscal room.
- When
- The forecast was released on October 22, 2026, and covers 2027 and later years.
- Where
- Germany.
- Why
- The forecast reflects the economic outlook and laws passed since the previous estimate. The sources say the additional revenue will not resolve budget pressures or fund all proposed measures.
Union
SPD
Tax policy
Union
The Union calls for an adjustment for so-called cold progression and opposes Klingbeil’s planned rise in the top income-tax rate.
SPD
Klingbeil’s tax proposal includes an increase in the basic tax-free allowance and a rise in the top rate; the SPD says the electricity-tax cut needs funding.
Electricity tax
Union
Chancellor Friedrich Merz has proposed cutting the electricity tax for households.
SPD
The SPD wants the cost of the proposed cut offset, including through reducing tax benefits, which the Union opposes.
The previous tax estimate was issued.
The new tax forecast was released, projecting higher revenue than the May estimate.
The Bundestag is expected to pass the 2027 federal budget.
- 2027 total tax revenue
- Just over €1 trillion, including federal, state and local governments
- 2027 federal tax revenue
- €398.6 billion, according to t-online
- 2027 increase for all levels
- €10.9 billion more than projected in May, according to t-online
- Increase through 2030
- €43.4 billion more for all levels than in the May forecast, according to t-online
- Federal increase in 2027
- Sources report either €4.1 billion or €3.3 billion
8 sources
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What people are saying
For 2027, the government "will not gain any new fiscal leeway overall, but we also won’t have to close any new gaps.
Für 2027 gewinnen wir insgesamt keine neuen Spielräume hinzu, wir müssen aber auch keine neuen Lücken schließen