Germany's €25B marriage tax break mostly benefits parents, study reveals
Germany's income-splitting tax system saves married couples around €25 billion each year. A new study by the Cologne Institute for Economic Research (IW) breaks down who benefits most from these tax breaks. The findings were published in Handelsblatt and rely on data from the German Federal Statistical Office. The largest share of savings—66%—goes to parents with 'tax-relevant children', meaning minors or those still in education. Another 34% supports parents whose children have already finished their studies. Overall, 90% of the total tax advantage helps married couples with children.
Among households, 63% of the savings go to couples where both partners earn an income. The remaining 37% benefits single-earner families. Childless married couples receive about 9% of the total, equivalent to roughly €2.2 billion per year. The study also found that nearly 90% of these tax benefits are claimed in western Germany. However, the data does not provide a detailed breakdown by individual states or regions.
A potential reform of the income-splitting system would impact single-earner families the most. The current system delivers the largest financial relief to parents with dependent children. The IW's analysis highlights how the tax savings are distributed across different household types.
