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Federal government decides on billion-dollar investment booster!
Bundestag decides on tax relief to promote economic development. Companies benefit from higher depreciation and lower taxes.
Federal government decides on billion-dollar investment booster!
Today, June 26, 2025, the signs point to a decisive turnaround in the German economy. The Bundestag is planning to pass tax relief worth billions that pursue one fundamental goal: finally getting the weakening economy going again. This threatens to remain without significant growth for the third year in a row. As Radio Köln reports, the new package of measures could counteract this lull.
The planned measures include expanded depreciation options for companies, especially for machines and electric vehicles. Companies have the option of depreciating their expenses for new purchases on a declining balance basis - this means that they can claim up to 30% of the costs for tax purposes in the first few years. This regulation initially applies to the investment window between July 1, 2025 and January 1, 2028.
A comprehensive package of measures
The Federal Cabinet has approved a draft for an immediate tax investment program, the aim of which is to get Germany back on track for growth as quickly as possible and to strengthen competitiveness. According to the [Federal Ministry of Finance](https://www.bundesfinanzministerium.de/Content/DE/PRESS Releases/Finanzpolitik/2025/06/2025-06-04-kabinett-beschliesst- Growthbooster.html), the short-term tax legal changes are intended to ensure clarity and planning security in companies' investment decisions.
Another measure in the bill provides for a gradual reduction in corporate tax. This is expected to fall from the existing 15% to 10% by 2032. This could reduce the overall tax burden for companies to slightly less than 25%. In addition, corporate investment in e-mobility is promoted through special depreciation, which allows companies to deduct 75% of the costs of new electric vehicles for tax purposes in the year of purchase.
The financial impact
The total volume of the relief measures amounts to around 46 billion euros by 2029, which should help companies secure their future investments. While politicians are optimistic about the legislative changes, some economists are expressing additional concerns. [Tagesschau](https://www.tagesschau.de/wirtschaft/konjunktur/steuerwechselen-entlastungspaket-wir Growth-100.html) describes the measures as an important signal, but not as a final solution to the challenges of medium-sized businesses.
The uncertainties caused by the international situation and the conflict with the USA over tariffs, for example due to the policies of US President Donald Trump, play a significant role. The tax losses from the “growth booster” are estimated to be 48 billion euros, which poses particularly enormous challenges for highly indebted municipalities.
Additional investments and compensation
Another focus in the current discussions is on financial compensation for the municipalities, which will face enormous losses of income in 2025. The federal government has promised to fully cover municipal tax losses by 2029. The compensation payments will be made through the distribution of VAT revenue, and an additional 8 billion euros will be invested in educational institutions and hospitals.
Overall, the experts are cautiously optimistic. However, the Federal Association of Wholesale, Foreign Trade and Services (BGA) calls for targeted impulses to be given to small and medium-sized businesses in order to improve economic conditions in the long term. This shows that despite the proposed law, the challenges facing the German economy should not be underestimated. It could soon become clear whether these measures will actually bring about the hoped-for upswing.