Taxation today

There is still quite some time before tax declarations for 2022 will be submitted. Nevertheless, it is good to know about changes for the current year early on. 2022 brings in a wide range of tax-related changes for employers, persons paying alimony, low-paid workers, and apprentices.

The legislature has made many adjustments:

• Tax exemption: As in past years, the basic income tax exemption has increased once again. For single people, it has increased to € 9,984. This represents a jump of € 240 over the previous year. Spouses who file their income taxes together receive twice this amount, or € 19,968.
• Maximum alimony: The tax-deductible maximum amount for alimony payments was adjusted to the basic exemption. It is also € 9,984 in 2022. Tax payers can deduct these amounts annually as extraordinary expenses if they are required to pay alimony to their ex-spouse, their non-minor children no longer entitled to receive child allowance, or other needy family members.
• Minimum wage: As of 01/01/2022, low-paid workers receive a minimum wage of € 9.82 per hour instead of € 9.60 as in the past. The next wage increase has also already been scheduled: On 07/01/2022, the minimum wage will increase once again to € 10.45. The new government wants to raise the minimum wage to € 12.
• Apprentice compensation: Apprentices who are not subject to collectively bargained wages will also have more funds in their account. The legislature has increased minimum compensation for the first apprenticeship year to € 585 per month. During the second apprenticeship year, they will receive 18 % more, then 35 % more in the third apprenticeship year and 40 % more in the fourth. This regulation, however, applies only to young people starting their apprenticeship in 2022.
• Limit to benefits in kind: In the past, benefits in kind up to a maximum of € 44 were exempt from tax and social insurance contributions. The exemption limit has increased to € 50 monthly starting in 2022.