The federal and state governments agree: 48 billion euros for investments!

The federal and state governments agree: 48 billion euros for investments!

In an important agreement, the federal and state governments have put together a comprehensive investment package, the details of which are to be published today, June 24, 2025. This program includes significant financial cushioning and tax relief for the economy, aimed at combating the current economic weakness. The Bundestag will decide on Thursday on the proposals, which include, among other things, expanded tax depreciation for machines and electric vehicles. Loud in southern Thuringia Corporate income tax will also be reduced from 2028 in order to create incentives for investments.

How ZDF today reported, the states are demanding financial compensation for the tax losses resulting from the planned measures. These amount to a total of around 48 billion euros. This particularly affects municipalities, which have to expect a loss of 13.5 billion euros. The federal government plans to cushion the financial impact for the states and municipalities in order to ensure a smooth transition.

Financial consequences of the investment program

The targeted tax relief leads to significant revenue losses for all levels of government: 13.5 billion euros less for the municipalities, 16.6 billion euros for the states and 18.3 billion euros for the federal government. These sums illustrate the challenges facing those responsible. Chancellor Friedrich Merz (CDU) emphasizes that the tax relief could have a delayed effect, but in the long term it should lead to higher economic growth and thus higher tax revenue.

Against this background, the prime ministers of the federal states, together with Chancellor Merz, agreed on a compromise that emphasizes the priority of compensation for the municipalities. How MDR reported, the level of relief for the municipalities and states will be clarified before the decisive Bundestag vote in order to prevent delays due to inconsistent positions in the mediation committee. Full compensation for tax losses for municipalities is being discussed, while some federal states have already announced the prospect of partial compensation.

Further discussions and perspectives

Michael Kretschmer, Prime Minister of Saxony, described the agreement as an “important interim step” and reiterated the need for further negotiations. This agreement should not only help the municipalities in the short term, but also make a significant contribution to the country's economic stability. The coming negotiations will be crucial to clarify the modalities of financial support, which will be worked out in the next few days.

The situation remains tense and it remains to be seen to what extent the government can offer local and state governments financial compensation. The Bundestag's decision on Thursday will have a significant impact on the future economic prospects in Germany.