Annual Tax Act 2026: The planned changes to the Income Tax Act
Annual Tax Act 2026 – changes in income tax lawOn 12 August 2026, the Federal Cabinet adopted the draft of an Annual Tax Act 2026 [Jahressteuergesetz 2026–JStG 2026]. The legislative procedure is intended to be concluded before the end of the year. What is being implemented is legislative need dictated by technical considerations, in particular adaptations to European Union law and responses to the case law of the Federal Fiscal Court [Bundesfinanzhof–BFH]. One focus lies in income tax law: Of particular practical relevance are the first statutory rules on the allocation of the purchase price for developed properties (section 6f of the draft Income Tax Act [Einkommensteuergesetz–EStG]), the halving of the relevant period for the first place of work [erste Tätigkeitsstätte] and the increase in the exemption threshold for waiving the deduction of tax at source in section 50c of the Income Tax Act. In addition, the ministerial draft [Referentenentwurf] of an “Income Tax Reform Act 2027” [Einkommensteuerreformgesetz 2027–EStRefG 2027] gives rise to a possible change to the income tax rate schedule (section 32a of the Income Tax Act).
