State tax revenues are set to rise more strongly than expected in the coming years. According to the autumn tax forecast published on Thursday, additional revenues of a total of €33.6 billion are projected by 2029 compared with the May forecast. However, this increase will benefit only the federal states and municipalities. The federal government, after slight gains in the next two years, is expected to face lower tax revenues than previously anticipated from 2028 onwards.
Federal Finance Minister Lars Klingbeil (SPD) described the development as a "significant growth-related additional revenue" compared with the May tax forecast. Bund, states, and municipalities "benefit from better economic growth." However, he added, "there is absolutely no reason to sit back. In view of the budget gap that opens up from 2027, this growth-related additional revenue only provides limited relief."
According to the forecast, the federal government can expect slightly higher tax revenues this year and next: an increase of €1.8 billion in 2025 and €4.9 billion in 2026. Thereafter, expected tax revenues fall short of the May forecast (2028: minus €4.0 billion; 2029: minus €3.7 billion). Overall, for the period from 2025 to 2029, additional and lower revenues for the federal government roughly balance out compared with the spring forecast.
Klingbeil explained that the main reason is that the federal government bears the bulk of the tax relief measures enacted by the government. "The federal government carries the costs of the growth booster with which we are stimulating the economy," Klingbeil said. "That is why the federal government benefits little from additional tax revenues."
But he stressed that the approach is the right one: "Because for me, it remains crucial to secure jobs in Germany and to create the jobs of the future here," the minister said. The federal states can expect additional revenues of €7.8 billion this year and €7.9 billion next year. After that, the upward trend slows: €1.7 billion is projected for 2028 and €1.6 billion for 2029.
Municipalities also benefit from the tax development: an increase of €1.8 billion compared with the May forecast this year, €2.3 billion in 2026, and between €3.4 billion and €4.0 billion annually from 2027 to 2029. On fiscal policy, Klingbeil said he would continue his "clear consolidation course." "No structural leeway is created for the federal budget." He added that all members of the federal government must contribute to consolidation efforts: "It remains the task of all cabinet colleagues to submit proposals for savings."
The revenue forecast was prepared by the Working Group on Tax Forecasts. This body produces projections every May and October for current and future tax revenues, which serve as the basis for budget planning by the federal government, states, and municipalities. In addition to representatives from the federal government, states, and municipalities, the working group includes experts from economic institutes and authorities.
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