End of solidarity surcharge since 2021: who still has to pay the soli??

Since January 2021, 30 years after reunification, it has been eliminated for the vast majority of taxpayers – for about 33 million. For further about 2.5 million citizens it is partly abolished, about 1.3 million Germans must continue to pay it.

But who benefits especially from the partial abolition? And for whom the Soli has not fallen away? t-online explains.

What exactly is the Soli?

The solidarity surcharge, or Soli, was originally introduced in 1991 to finance the so-called Aufbau Ost and was temporarily abolished. In its current form, it has existed since 1998 as part of the Solidarity Pact. The money – like all tax revenues – is not earmarked for a specific purpose and flows into the federal budget.

Until 2021, basically every taxpayer paid the soli. It was levied as a surcharge of 5.5 percent on income, wage and capital gains tax.

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From a tax amount of 973 euros, the Soli increased gradually. Only when taxpayers 1.340 euros in income tax per year, the full 5.5 percent soli became due. For married couples assessed together, the double value of 1 applied in each case.944 Euro as exemption limit and 2.680 euros for the full Soli.

Since 2021, however, the Soli has been eliminated – at least for about 90 percent of taxpayers (see below). Companies and associations that have to pay corporate income tax also continue to pay the Soli.

FDP has filed suit against partial abolition

The Bundestag had voted in November 2019 for the partial abolition of the Soli. The FDP considered the solidarity surcharge unconstitutional beyond 2020. The argumentation: the Soli was tied to the Solidarity Pact II, which however expired at the end of 2019. The liberals therefore filed a complaint with the Federal Constitutional Court.

This criticism also came from several business associations. Finance Minister Olaf Scholz (SPD) defended the regulation in its current form – and saw no constitutional concerns.

"The solidarity pact expires at the end of 2019, but the tasks associated with financing German unity are by no means all done", said the politician at the end of 2020 the newspapers of the Funke media group. "Equivalent living conditions" are not reached yet, the Soli is rightfully.

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For whom has the Soli been abolished since 2021??

90 percent of all income taxpayers will no longer have to pay the additional levy, which was first introduced in 1991, as of January 2021. For a further 6.5 percent of payers, the soli has been reduced in stages from 5.5 percent to 3.5 percent.

Specifically, the abolition worked like this: The exemption limits, which until 2021 ensured that low-income earners did not have to pay the Soli, increased drastically. For a single, the limit rose from 972 euros to 16.956 euros. For a married couple, it increased from 1.944 euros on 33.912 Euro.

Middle-income taxpayers benefited in particular – because low-income earners do not pay the Soli anyway. Up to which income the Soli is omitted, one can say only approximately due to different tax exempt amounts. An overview:

  • Single: Single persons with a gross annual income of up to around 73.000 euros no longer pay the soli.
  • Couple: Here, the Soli waiver depends on whether both earn or not. If only one earns, the soli is waived up to an income of 136.000 euros. If both earn roughly the same amount, the solidarity pact is waived up to an income of 147.000 euros a year dropped.
  • Family with children: The omission of the Soli depends here on the number of children and whether both parents are earners. A family with two children and one earner, will pay approximately up to a gross annual wage of 151.000 euros fully relieved.

How much will I save with the abolition of the Soli??

On the page of the Federal Ministry of Finance you can calculate how much Soli you save since 2021. You only have to indicate how your income is assessed – i.e. single assessment or joint assessment – and your taxable annual income.

If you don’t know your taxable income, you can calculate it on this page from the Ministry of Finance.

Tip: Take a look at what would come out if you were to invest the money you save by eliminating the solidarity surcharge. You can use the following savings plan calculator from t-online:

Who still has to pay Soli?

The Soli has not been abolished for all taxpayers – some citizens still have to pay the surcharge, viz Top earners.

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Who as a single more than about 9.300 euros in gross monthly earnings still has to pay the full solidarity surcharge of 5.5 percent. For couples, the limit is a joint gross salary of 18.250 euros per month.

In addition, the soli is not waived for capital gains above the saver’s lump sum of 801 euros. Also Company, who pay the so-called corporate income tax of 15 percent, must continue to pay the full Soli on this amount.

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