On Thursday, the Bundestag passed a package of tax relief measures. The tax amendment bill passed on Thursday increases the commuter allowance, reduces the VAT rate in restaurants, and raises the volunteer allowance. In addition, union membership fees and donations to political parties will receive greater tax benefits. The law still needs the approval of the Bundesrat, which has so far rejected the bill because of the tax losses for the states.
The reduction of VAT for restaurants drew particular criticism during the plenary debate. The Left Party and the Greens called it an economically unsound “tax gift.” The law was passed with the support of the coalition factions of the CDU/CSU and SPD. The Greens and AfD voted against it, while the Left abstained.
From 1 January 2026, the VAT on meals, but not beverages, in restaurants will be permanently reduced from 19% to 7%. According to the government, the measure, included in the coalition agreement at the initiative of the CSU, aims to stabilize the restaurant sector. Restaurants are not obligated to pass on the tax reduction to customers.
"Both passing the tax reduction on to consumers and making additional investments are possible," the legislative proposal states. Industry associations have already indicated that any additional revenue would likely be used to prevent further price increases rather than reduce prices.
During the debate, Jens Behrens (SPD) emphasized that the tax cut for the hospitality industry would benefit not only restaurants and bakeries, but also caterers who supply daycare centers and schools.
The commuter allowance will rise to a uniform 38 cents per kilometer starting next year. Previously, taxpayers received 30 cents per kilometer for their commute, rising to 38 cents from the 21st kilometer onward. The government explains the change as necessary to ensure equal treatment of all taxpayers regardless of commute distance.
The law also increases the volunteer allowance from €840 to €960 and the exercise instructor allowance from €3,000 to €3,300 per year. Associations can therefore provide higher compensation without the recipients facing additional taxes. Furthermore, the maximum amounts for tax-deductible donations to political parties are being doubled. Union members will also be able to deduct their contributions in addition to existing allowances and work-related expenses. The law also stipulates that prizes for Olympic medal wins will now be tax-exempt.
The law will result in revenue shortfalls for federal states and municipalities, for which they may seek compensation from the federal government. However, the government has rejected any reimbursement of the lost tax revenue.
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