Huge investment package: Federal and state governments agree on tax relief!

Huge investment package: Federal and state governments agree on tax relief!

Today, June 24, 2025, the federal and state governments reached an agreement on an extensive investment package that is primarily intended to promote economic stability. This agreement was reached during a meeting of the 16 Prime Ministers and Chancellor Friedrich Merz in Berlin. Details of the planned measures are to be published today, such as FAZ reported.

The focus of the package is tax relief for companies, which is intended to serve as an incentive for investment. In particular, expanded tax depreciation options are planned for machines and electric vehicles. This could help promote economic recovery and encourage companies to invest.

Compensation for tax losses

However, the agreement also brings challenges. The financial relief plan will lead to significant tax losses, estimated at a total of around 48 billion euros. This sum is divided into 13.5 billion euros for municipalities, 16.6 billion euros for the states and 18.3 billion euros for the federal government, according to the ZDF Today.

In order to compensate for these financial losses, the federal government is planning measures to support states and municipalities. However, it is unclear whether the tax losses will be fully or only partially offset. Merz emphasized the priority of compensation for municipalities that often suffer from financial pressure, especially highly indebted municipalities.

A full compensation for the tax losses for the municipalities was guaranteed. Proportional compensation from federal funds for investments in education and hospitals is planned for the states. The clarification of the relief modalities will be carried out by a working group that will take action in the coming days.

Political approval and next steps

The Bundestag will vote on the investment package on Thursday. The aim of the federal government is to ensure that everything runs smoothly and to avoid delays due to disagreement in the mediation committee. After the Bundestag's approval, the law will be discussed in the Bundesrat on July 11th. The countries have already signaled their approval.

The planned measures, including the planned corporate tax cut from 2028, are intended to help the economy and are part of a broader economic relief package that is due to come into force between 2025 and 2029. Some prime ministers, such as Manuela Schwesig from Mecklenburg-Western Pomerania and Michael Kretschmer from Saxony, have seen the agreement as an important step, but one that also brings with it challenges.

Experts comment on the current economic situation and the need for such measures in a nuanced manner. The coming decisions will be crucial for the financial future of the municipalities and the stability of the entire economy.