Income Tax Germany

About Income Tax Germany

Modern German income tax was established by the Miquel Tax Reform of 1891, named after Finance Minister Johannes von Miquel. The reform introduced progressive tax rates and became a model for other countries. Weimar Germany relied heavily on income tax, but hyperinflation in 1923 destroyed the tax base. After World War II, West Germany rebuilt its tax system. The top income tax rate reached 56 percent in the 1970s. German reunification in 1990 created tax challenges, as East German incomes were much lower. The Solidaritaetszuschlag, or solidarity surcharge, was introduced in 1991 to fund reunification costs. The surcharge was gradually reduced and largely abolished in 2021. German income tax rates are among the highest in the OECD.