Published by Global Banking & Finance Review®
Posted on January 8, 2026
2 min readLast updated: January 20, 2026
Add as preferred source on GoogleGermany's SPD plans to cut income tax for low and middle earners by 2026, focusing on social cohesion and economic support, while CDU prioritizes corporate tax cuts.
By Andreas Rinke and Maria Martinez
BERLIN, Jan 8 (Reuters) - Germany's Social Democrats (SPD) want to bring forward an income tax cut for low and middle earners in Europe's biggest economy to 2026, according to a draft statement by the SPD parliamentary group.
The SPD and its senior coalition partner, the conservative Christian Democrats (CDU), are looking to accelerate tax relief in an effort to support the sluggish economy, but the two parties differ on priorities.
The SPD is framing its push as a matter of social cohesion and has proposed higher taxes for top earners and wealthy people, as well as a reform of inheritance tax, to help finance the planned cuts.
The CDU is also expected to reaffirm its support for income tax relief for low and middle incomes which was set out in the coalition agreement.
However, the CDU and its Bavarian sister party, the CSU, want to bring forward a planned cut in corporate tax from 2028 to 2026.
SPD parliamentary secretary Dirk Wiese played down prospects for that move.
"If I had to choose what is feasible this year, I would say we must prioritise this tax reform for low and middle incomes, for working people. If there is further scope, we will be happy to look at it," Wiese told RTL/ntv.
(Reporting by Maria Martinez and Andreas Rinke, Editing by Madeline Chambers)
Corporate tax is a tax on the income or profit of corporations. It is typically calculated as a percentage of the company's profits and varies by jurisdiction.
Tax reform refers to changes made to the tax system, including adjustments to tax rates, tax brackets, and deductions. The goal is often to improve fairness, efficiency, and revenue generation.
Inheritance tax is a tax imposed on individuals who inherit assets from a deceased person. The tax rate may depend on the value of the inheritance and the relationship to the deceased.
Economic growth is an increase in the production of goods and services in an economy over a period of time, typically measured by the rise in gross domestic product (GDP).
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