Chancellor Merz on Thursday unveiled a 34-point package of pension, tax and
labor reforms, aiming for parliamentary approval of the main elements by
year-end. On pensions, the plan implements recommendations to add
capital-market-based elements to the state pension system and to gradually raise
the retirement age over the coming decades. Tax changes raise allowances and
ease progressivity for middle incomes; two-child working families would receive
more than €600 (about $685) in annual income-tax relief. The measures are
projected to cut household tax burdens by roughly €10bn a year and would be
partly financed by lifting the top marginal rate from 45% to 47% on annual
taxable income above €280,000. Industrial and technology support will target
autos, chemicals and pharma, cleantech, machinery, batteries, semiconductors and
AI, and the Germany Fund investment framework will be expanded into a strategic
vehicle focused on resilience, energy and raw materials.
