Overview
- The finance ministry has revived a plan to abolish tax classes III and V and confirmed an automatic switch to a factor variant of class IV, but the measure is not law and is currently under federal–state consultation.
- Under the factor method the Ehegattensplitting is preserved at annual assessment while the splitting advantage is distributed across monthly wages, which should prevent very high monthly deductions for the lower‑earning partner.
- The proposal appears inside a 142‑page draft Steuervereinfachungsgesetz with 28 measures that aims to cut bureaucracy and the ministry says around 12 million partners who now must file returns because of III/V could lose that obligation.
- The ministry’s fiscal estimate sees near‑term neutrality with modest gains in 2027–28 and projected annual revenue declines from 2029, and the draft suggests implementing the change in payroll withholding from January 1, 2030.
- The plan faces strong political resistance from Union and CSU politicians who call it an intrusion on couples’ choice, and opponents warn it could be a step toward broader changes to the Ehegattensplitting, so parliamentary and state hurdles remain.