Germany's CDU and SPD Consider Increasing Controversial Commuter Tax Allowance

The widely used but criticized policy is a key topic in coalition talks, highlighting tensions between economic relief and environmental goals.

Nearly 14 million German employees, primarily middle-income earners, benefit from the commuter tax allowance, which offsets travel costs to work.
The allowance was raised to 38 cents per kilometer from the 21st kilometer in 2022, and coalition discussions now include a potential further increase.
Critics, including economists and the OECD, argue the policy is environmentally harmful and financially burdensome for the government.
Data shows 84% of commuters use cars for at least part of their journey, with rural residents particularly reliant on private vehicles due to limited public transport options.
The policy remains central to debates over balancing economic support for workers with Germany's climate commitments and fiscal sustainability.