Germany's 2025 Budget Delay Removes KfW 455-B Subsidy; Christmas Bonus Receivers Drop
The German federal government has delayed its budget for 2025 due to political disagreements, leading to the removal of certain subsidy programs like KfW 455-B for accessibility improvements. Meanwhile, the trend shows a decrease in employees receiving a Christmas bonus this year, with only 75% receiving it compared to 87% in previous years.
The delayed budget means only ongoing subsidies from the previous year can be paid out at the start of 2025, and new or increased subsidies, including KfW 455-B, cannot be approved until a new budget is legislated. Applications for KfW 455-B must be submitted by the end of 2024 to be considered for 2025.
The Christmas bonus trend shows a decline, with 12% fewer employees receiving it this year. While the bonus can push the personal tax rate upwards, employers can mitigate this by converting the bonus into tax-free contributions to company pension schemes or making tax-free gifts. The tax for the Christmas bonus is calculated based on the difference between the expected annual wage with and without the bonus, and it is taxed as 'other income', leading to a higher tax burden. A recent labor court ruling also allows companies to reduce the Christmas bonus for employees who have gone on strike.
The delayed federal budget for 2025 has led to the removal of certain subsidy programs, with KfW 455-B no longer available for new applications starting in 2025. The trend of employees receiving a Christmas bonus has also decreased, with fewer employees benefiting from this extra income due to tax implications and recent labor court rulings.
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