Einkommensteuerreform 2027: Was für Selbstständige drinsteht

On 2 September 2026 the German federal cabinet adopted the draft Income Tax Reform Act 2027 (Einkommensteuerreformgesetz 2027). The headlines are about higher allowances and more child benefit, but for the self-employed and small businesses the relevant points sit elsewhere: the tradesperson tax credit is being cut, the flat-rate tax on mini-jobs is set to more than double, and a new top rate of 47 percent is being added. Here is what the draft actually contains, and what you should decide before the end of 2026.

What the Income Tax Reform Act 2027 is about

The Federal Ministry of Finance describes the project as a two-stage reform: part of the changes are to take effect on 1 January 2027, the rest a year later on 1 January 2028. The ministry puts the relief volume at around 10 billion euros. It is financed partly through a higher top rate for very high incomes and partly through cutting back tax reliefs.

One point matters for context: this is still a government draft. Neither the Bundestag nor the Bundesrat has approved it. Individual figures can still shift during the parliamentary process, and for the basic and child allowances that is in fact likely, because the progression report due in autumn 2026 adjusts the underlying calculation. So plan with these figures, but do not rely on them to the cent.

Basic allowance and tax scale: the planned relief

The basic allowance (Grundfreibetrag) is the amount up to which your taxable income remains completely tax free. It applies to the self-employed just as it does to employees. The draft provides for the following steps:

• 2026: 12,348 euros (current law)
• 2027: 12,564 euros
• 2028: 12,900 euros

In addition, the second progression zone is to be flattened. The top rate of 42 percent would then no longer start at around 69,900 euros but only at around 70,600 euros of taxable income. That sounds small, but it works across the whole tax scale and benefits higher-earning sole traders and freelancers in particular.

The employee allowance (Arbeitnehmer-Pauschbetrag) rises from 1,230 euros to 1,430 euros. For you as a self-employed person this only matters if you also receive employment income, for example from a part-time job or as managing director of your own GmbH. For your employees it is immediately noticeable: the ministry expects around 1.3 million people to be able to skip the Anlage N form in future, because their work-related expenses stay below the allowance.

Families: child benefit and child allowance both rise

If you have children, your position improves twice over. Child benefit (Kindergeld) is to rise from the current 259 euros to 267 euros per child per month from 2027, and further to 272 euros from 2028. The child allowances (Kinderfreibeträge) are set at 10,056 euros for 2027 and 10,236 euros for 2028.

In practice the tax office decides automatically, through what is called the Günstigerprüfung, whether child benefit or the child allowance is more favourable for you. The allowance matters mainly at higher incomes, which is exactly where many successful self-employed people sit.

Counter-financing: 47 percent for very high incomes

The relief is partly paid for at the top end. Under the draft, the 45 percent top rate would apply from 250,000 euros of taxable income instead of only from around 277,800 euros as at present. Above that, a new rate of 47 percent from 280,000 euros of taxable income is to be introduced.

For the vast majority of self-employed people this is not an order of magnitude that matters day to day. But anyone whose sole proprietorship or partnership operates in this range should talk to their tax adviser about legal form and profit retention by autumn 2026 at the latest. The burden gap between a sole proprietorship and a corporation shifts again with the new rate band.

The two cuts that hit small businesses directly

Tradesperson services: 15 instead of 20 percent

The ministry expressly describes this point as cutting back subsidies: the tax credit for tradesperson services under § 35a (3) EStG is to fall from 20 percent to 15 percent of the qualifying expenses, and the maximum amount from 1,200 euros to 900 euros.

A worked example: you have your bathroom renovated and the labour portion of the invoice is 6,000 euros. Under current law you deduct 20 percent of that, 1,200 euros, directly from your tax liability. Under the draft it would be 15 percent, that is 900 euros. Difference: 300 euros. Anyone using the maximum amount loses exactly those 300 euros per year.

Tip: what counts for the credit is the year of payment, not the year the work is done. If you are planning a larger renovation anyway and can settle the invoice in 2026, you secure the more favourable 20 percent. Unchanged: the materials portion is never eligible, only labour, travel, and machine costs. And you may not pay in cash, there has to be an invoice and a bank transfer.

Mini-job flat-rate tax: from 2 to 5 percent

If you employ mini-jobbers, this is the change with the biggest everyday effect. The uniform flat-rate tax under § 40a (2) EStG, which settles wage tax, solidarity surcharge, and church tax in a single amount, is to rise from 2 percent to 5 percent of the wage from 2027.

An example using the mini-job threshold of 633 euros that applies from 2027: the flat-rate tax is currently 2 percent, that is 12.66 euros a month. At 5 percent it would be 31.65 euros. That is roughly 19 euros more per mini-jobber per month, or a good 228 euros a year. With five mini-jobbers we are talking about more than 1,100 euros in additional staff costs per year, and that is only this one item.

Why this stings particularly: the flat-rate tax is not the only lever moving at the turn of the year 2026/2027. The statutory minimum wage rises to 14.60 euros on 1 January 2027, which moves the mini-job threshold from 603 euros to 633 euros, and the employer's flat-rate health insurance contribution under § 249b SGB V rises in the commercial sector from 13 percent to 17.5 percent. These three points arrive together, and they all arrive on the same day.

Sunday and public holiday supplements: a higher ceiling

Tax-free supplements under § 3b EStG are tied to an upper limit on the underlying hourly wage. This maximum qualifying base wage is to be raised: for Sunday and public holiday work from 50 euros to 75 euros per hour.

This matters for businesses with shift or weekend operations, so hospitality, care, logistics, security services, and manufacturing. Anyone previously hitting the 50-euro limit can pay out a larger share of supplements tax free in future. That makes weekend shifts more attractive for staff without gross costs rising to the same degree.

What you should do before the end of 2026

Three concrete actions for the current quarter follow from the draft:

1. Bring forward planned tradesperson invoices. If a renovation, a heating service, or a landscaping job is coming up anyway, paying in 2026 secures you the full credit of 20 percent up to 1,200 euros.
2. Recalculate your mini-job budget for 2027. Take 633 euros as the starting figure and calculate the flat-rate tax and health insurance contribution with the new rates. With tight staffing budgets it is better to know this now than in February.
3. Review your advance payments. If your 2026 profit differs significantly from the forecast, it is worth applying to adjust your income tax prepayments under § 37 (3) EStG. That affects your liquidity immediately, regardless of what parliament still changes about the 2027 tax scale.

Staying on top without following the legislative process

Tax reforms rarely become law in the form in which they left the cabinet. That is exactly why Buchführungsheld takes this part off your hands: real bookkeepers run your ongoing accounts, keep an eye on deadlines and changes, and get in touch when a new rule genuinely matters for your business, rather than bothering you with every ministerial draft. You just submit your receipts, we take care of the rest at a fixed price. If you want to know what the reform means for your specific figures, book a free initial consultation.

Frequently asked questions

When does the Income Tax Reform Act 2027 take effect?

The draft is designed in two stages: a first part is to enter into force on 1 January 2027, a second on 1 January 2028. So far, however, only a government draft dated 2 September 2026 exists. The Bundestag and Bundesrat still have to approve it.

How high is the basic allowance in 2027?

Under the draft, the basic allowance would be 12,564 euros in 2027 and rise to 12,900 euros in 2028. In 2026 it is 12,348 euros. The final figures still depend on the progression report due in autumn 2026.

Is the tradesperson tax credit really being cut?

The government draft provides for it: 15 instead of 20 percent of qualifying expenses and a maximum amount of 900 instead of 1,200 euros from 2027. The ministry itself describes the measure as cutting back subsidies. It has not been passed yet, though.

How much more will a mini-job cost in 2027?

Three factors combine: the mini-job threshold rising to 633 euros because of the 14.60 euro minimum wage, the flat-rate health insurance contribution rising to 17.5 percent in the commercial sector, and the flat-rate tax of 5 instead of 2 percent provided for in the draft. For mini-jobs in private households the health insurance contribution stays at 5 percent.

Does the new 47 percent rate affect me?

Only if your taxable income exceeds 280,000 euros. Under the draft the 45 percent rate would already apply from 250,000 euros, whereas it currently starts at around 277,800 euros. For the great majority of self-employed people nothing changes here.