Employees may expect a positive surprise in their next payroll: The current tax adjustment brings taxpayers bottom line more net from the gross. Families and ordinary earners benefit first and foremost from tax relief. On the other hand, higher earners have to be prepared for higher social security contributions, according to Finanztip.
Basic allowance increased
With the increase in the basic tax-free allowance this year, an income of up to 8,820 euros pa remains tax-free for all. This corresponds to an increase of 0.73 percent. This should mitigate the consequences of cold progression. “In effect, this reduces the tax rate for everyone, even for top earners,” says Udo Reuß, tax expert at Finanztip.
In the case of single persons, the tax rate of 42 percent now applies only from a taxable income of 53,666 euros, after all an increase of 784 euros. For married and registered partners, who can be invested together, the double amount applies.
Social contributions rise
Adjusting the rate of income taxation benefits workers and compensates for the rising cost of living. However, the taxpayers’ contributions and the income thresholds rise – both of which affect the high earners. The resulting plus is therefore minimal.
In addition, the contribution for the statutory long-term care insurance (half of which is taken over by the employer) increases to 2.8 percent for childless and for all others to 2.55 percent.
“But even some low-wage earners have to pay extra in 2017,” explains Reuß. For example, according to calculations by the Tax Adviser Cooperative Datev, a married employee in Tax Class III who earns less than € 1,500 will receive € 18 less than in 2016 due to increased social security contributions this year.