The Mirz government wants to impose new taxes - they affect millions of workers
The German government, led by Friedrich Merz, is preparing a major tax reform that will exempt some overtime bonuses from taxes. The plan aims to help millions of employees who often work extra hours without sufficient financial compensation.
The proposal states that bonuses paid for overtime work that exceeds the standard weekly working hours for full-time jobs will not be taxed. In sectors subject to collective agreements, this applies to more than 34 hours per week, while the threshold is 40 hours in other sectors. However, the overtime hours themselves remain fully taxable, a clarification confirmed by the Wage Tax Assistance Association (VLH).
This step comes at a time when employees work an average of 28.2 extra hours annually, more than half of which are unpaid. A hypothetical example shows that a person earning 3,000 euros gross and working 28.2 extra hours monthly would receive about 64 euros extra net under the new rule.
Critics raise questions about the real beneficiaries. The exemption only includes overtime related to full-time contracts, which excludes part-time employees — who make up about 30 percent of the workforce in Germany. Women are particularly affected, as nearly half of women work part-time, compared to only 12 percent of men.
The ver.di union confirms that the impact of the measure will be very minimal for most workers. Only about 1.4 percent of employees regularly receive taxable bonuses for overtime work, meaning the average savings may not exceed 31 cents per month. In many sectors, no financial bonuses are paid for overtime at all; instead, employees are compensated with time off later. As a result, it is unlikely that low-income earners, part-time workers, and marginal workers will benefit, while the issue of inequality in the labor market remains unresolved.