Germany cuts tax forecasts by €81 billion by 2029

The economic downturn in Germany and tax breaks are likely to reduce total tax revenues by €81.2 billion in 2025-2029 compared to the October forecast. Such data was released by the working group on tax estimates, Reuters reports.

Tax experts predict that over this five-year period, the federal treasury alone will receive €33.3 billion less than expected in the estimate last fall.

In 2025, the federal government is expected to receive €0.6 billion less revenue, municipalities €3.5 billion less, and the German states €1.1 billion more,

The opinion of the tax assessors is an important factor in the discussion of the federal budget, the basis for revenue estimates is the government’s economic forecast.

“The results show that we need to strengthen revenues through higher economic growth. This is the only way we can gain fiscal leeway,” said Finance Minister Lars Klingbeil, presenting the forecasts.

He said that he expects a slight improvement in tax revenues starting in 2027. According to the minister, the government will approve the draft budget for 2025 by the end of June. It will include tax incentives for companies to stimulate growth and a law to create a €500 billion infrastructure fund.

In July of this year, the government is to adopt the draft German budget for 2026, and its discussion in parliament is to begin in September.

In April this year, German economic institutes lowered their forecast for the country’s GDP growth in 2025 to 0.1% from 0.8% expected in September, taking into account the initial US tariffs on steel, aluminum, and cars. Germany was the only G7 economy that did not grow over the past two years.