(GERMANY) – German Finance Minister Lars Klingbeil presented coalition negotiators with two income-tax reform options, one offering about €10 billion in relief and another worth about €20 billion, while weighing a higher levy on top earners.

The proposals place tax cuts and higher taxes on high incomes in the same negotiation, with the financing built in part around changes to the so-called rich tax. A finance ministry spokesperson said the talks were “continuing confidentially” and declined to comment on details.

Klingbeil also put forward an option that would raise the income threshold for Germany’s 42% top rate, which now starts at about €70,000 in taxable income. That part of the package is aimed at helping win conservative support in the coalition talks.

The richer package goes further. It would also include an inheritance tax increase and other measures ahead of an expected ruling by Germany’s constitutional court.

At the center of the financing debate is Germany’s current top-end tax structure. The 45% rich tax now applies to single taxpayers with taxable annual income of roughly €280,000 or more.

Below that sits the 42% rate, which begins at around €70,000 in taxable income. Klingbeil’s options would leave that rate in place but adjust the point at which it starts, while also considering a higher burden at the very top.

Those two elements move in opposite directions. Raising the threshold for the 42% bracket would ease the tax burden for some higher earners below the rich tax band, while a higher levy on top earners would ask those already paying the 45% rate to contribute more.

Coalition negotiators are weighing those trade-offs as part of a broader internal bargain. The design suggests Klingbeil is trying to pair visible income-tax relief with offsets that preserve room for funding the package.

The two figures, €10 billion and €20 billion, mark the scale of the choice now on the table. One option offers a smaller relief package, while the other expands the size of the cuts and adds the inheritance-tax component.

The more expensive version would therefore spread the political burden more widely. It would combine lower income-tax pressure in parts of the system with a sharper debate over wealth transfer, because an inheritance tax increase carries a different set of political costs than changes to wage and salary taxation.

Klingbeil’s approach also shows how tightly tax policy is tied to coalition math. The higher threshold for the 42% rate appears designed to make the package easier for conservatives to accept, even as the discussion of a steeper rich tax points in a different direction.

That balancing act matters inside negotiations that have not yet produced a public agreement. The finance ministry has kept its line narrow, saying only that discussions are continuing and refusing to go beyond that.

Any final package would alter the points at which different taxpayers begin facing Germany’s upper income-tax rates. People with taxable income around the current €70,000 threshold would watch whether that entry point moves upward, while single taxpayers with taxable annual income of roughly €280,000 or more would focus on whether the 45% rich tax rises.

The inheritance side of the debate carries its own timetable. Klingbeil’s more expensive option places an inheritance tax increase alongside other measures ahead of an expected ruling by Germany’s constitutional court, tying the tax discussion not only to coalition politics but also to a pending legal backdrop.

That connection gives negotiators another reason to keep several options open at once. A lower-cost package can deliver about €10 billion in relief with fewer moving parts, while the €20 billion version asks the coalition to accept a broader reshaping of how the burden is distributed.

No public decision has been announced. What exists now is a negotiating choice between two tax-cut packages, both linked to adjustments higher up the income scale, and one of them linked as well to an inheritance tax increase before the constitutional court is expected to rule.

The immediate signal from Berlin is that the argument is no longer about whether to change taxes at all, but about how far to go and who should finance the difference. With talks still “continuing confidentially,” Klingbeil has put the coalition’s fault lines in plain view: relief of about €10 billion or about €20 billion, a possible higher rich tax, a higher threshold for the 42% rate, and an inheritance tax increase in the costlier plan.