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KEY POINTS: Germany’s inflation relief measures to support people in cost of living crisis

The German Bundestag has passed tax relief and other measures to help people deal with rising inflation amid the cost of living crisis. Here's a look at what you need to know.

Shoppers Stralsund, northern Germany, on November 6th.
Shoppers in Stralsund, northern Germany, on November 6th. Photo: picture alliance/dpa | Stefan Sauer

The Inflation Compensation Act, which was passed with a majority in the Bundestag on Thursday, is aimed at offsetting the effects of high inflation on income tax.

The German parliament has also agreed on the largest increase in child benefit in the history of Germany. 

The changes are set to come into force after the Bundesrat – which represents the states – has given its approval.

Here’s a roundup of the planned relief:

Tax system will be adjusted to high inflation

The inflation compensation act, which was put forward by the coalition government of the Social Democrats, Greens and Free Democrats, provides that taxation will be adjusted to inflation, to help around 48 million people in Germany avoid additional burdens.

The law provides for two relief stages in the coming years. 

The total amount of tax relief will be over €12 billion in 2023, going up to around €18 billion in 2024.

It’s aimed at addressing cold progression, which refers to a situation where a pay rise is ‘eaten up’ by inflation. The result is that people have less money at the end of the day, despite getting paid more.

Finance Minister Christian Lindner, of the pro-business FDP, recently argued that if an income of €43,000 has a purchasing power of only €39,000 in the coming year due to inflation, the state should not levy as many taxes as if it were still €43,000 in buying power.

To compensate for this, the government is turning the screws on the income tax scale.

The basic tax-free amount, i.e. the income up to which no tax has to be paid, is to rise – by €561 to €10,908 next year. Furthermore, the top tax rate of 42 percent will not apply until taxable income reaches €62,827 next year. Currently, it’s charged on incomes above €58,597.

In 2024, this benchmark is set to rise to €66,779. The federal government is deliberately not touching the limit for the even higher wealth tax rate of 45 percent because it does not consider any additional relief necessary in this income bracket.

A person in Germany holds cash. The government has pledged to clamp down on gas prices.

A person in Germany holds cash. The government has pledged to clamp down on gas prices. Photo: picture alliance/dpa | Lino Mirgeler

Rise in child benefit

Families can look forward to extra relief from January 2023. Child benefit (Kindergeld) is to be raised to a uniform €250 per month per child, and €275 per month for their third child.

This translates to an increase of €31 a month for the first and second child and €25 per month for the third child. Child benefit for any additional children will remain unchanged at €250 per month. 

Child allowance (Kinderfreibetrag), which guarantees that the parents’ income remains tax-free up to a certain amount, will also be increased, as will the maximum amount of tax-deductible child support, for example for students.


The increase in child welfare support is intended to ease the burden on families, as they suffer more from the rising cost of living than households without children, the coalition government said.

One-off payment for gas and district heating

A billion-euro emergency aid grant funded by taxpayers for gas and district heating customers in Germany has also been agreed. 

In December, consumers will have their instalment payments waived for a month.

The one-off relief is meant to bridge the gap until the general gas price cap takes effect – at the latest for consumers in March next year.

READ ALSO: How much could households save with Germany’s gas price cap?

A person turning on their radiator in Germany.

A person turning on their radiator in Germany. Photo: picture alliance/dpa | Bernd Weißbrod

Households and small businesses with an annual consumption of up to 1.5 million kilowatt hours will receive the one-off relief payment.

Certain institutions in the care and education sector and in medical care will also receive the emergency aid – even if their consumption is higher.

The amount of relief is calculated on the basis of one-twelfth of the annual consumption forecast by the supplier in September 2022 and the December gas price.

In this way, the prices, some of which have risen significantly at the end of the year, are to be taken into account.

When it comes to district heating, the amount of the September bill and a “flat-rate adjustment factor” are to be used, which takes into account the price increases up to December.

Tenants are to receive the December relief with their next annual heating bill. Landlords have one year to prepare and submit the statement – but must provide notice of the estimated credit this December.

READ ALSO: When will people in December get their gas bill paid?

Sharing of CO2 costs

The Bundestag also passed a regulation for sharing the costs of the climate levy between tenants and landlords.

Up to now, landlords have been able to pass on the CO2 levy on heating oil and natural gas, which has been payable since the beginning of 2021, in full to tenants.

In future, the additional costs are to be divided between tenants and landlords. Authorities say there will be a graduated model which will encourage tenants to to save energy, and will give landlords an incentive to make structural improvements.

Landlords will bear a higher share (up to 95 percent) of the climate levy the more carbon dioxide emissions their building causes, for example because of an old heating system or poor insulation. If a building is in good energy condition, tenants pay the larger share of the CO2 levy (up to 100 percent).

READ ALSO: German liberals delay plans to cut CO2 for tenants

Reform of housing benefit (Wohngeld)

The Bundestag has also passed a far-reaching reform of housing benefit.

As a result, the benefit will be available to more people from next year and will also be higher: instead of the previous figure of around 600,000 households, around two million households will be entitled to Wohngeld.

The average amount is to rise significantly too – from around €180 to about €370 per month.

Housing benefit will also be restructured. There is to be a permanent heating-cost component, which will be included in the allowance calculation as a supplement to rent. A climate component takes into account rent increases due to energy-efficiency measures.

Furthermore, the general formula for calculating housing benefit will be changed.

READ ALSO: Wohngeld – How people in Germany can get help with rising living costs

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Which cities have the cheapest – and most expensive – Döner kebabs in Germany?

A lethal combination of high costs and new wage legislation means that the once humble Döner has almost become a luxury product. But where can you still find Germany's favourite fast food at bargain prices - and where won't you get much change for a tenner?

Which cities have the cheapest - and most expensive - Döner kebabs in Germany?

In modern day Berlin, where tech start-ups and luxury flats are a dime-a-dozen, there’s always a fair bit of nostalgia for the halcyon days of yore. For some, this dates back to the mystical time you could apparently nab yourself a three-bed Altbau apartment in Prenzlauer Berg for €200 warm, for others it’s the era of 24-hour Eckkneipen with €2 beer on tap, and for many, it’s that long-lost time where you could reliably find a Döner for €3 or less. 

What separates out these nostalgic fantasies is the fact that, unlike the mythical Prenzlauer Berg flat, the legend of the €3 Döner kebab is actually in most Berliners’ living memory. It’s shorthand for a simpler time before gentrification had fully run its course, when it didn’t matter if the flat you moved into didn’t have a kitchen because eating out was almost as cheap as cooking at home. And not too long ago, it was a reality.

While the price of kebabs in the ‘Döner capital’ have been climbing steadily for years, in the past year or so, the price hikes have been dramatic. Nowadays it’s not rare to shell out at least €6 or €7 for your kebab – even at the neighbourhood joints that were known for being cheap.

But the problem isn’t just confined to Berlin. As a recent survey by delivery company Lieferando has shown, Germany’s most popular fast food option is soaring in price across the country.

READ ALSO: How the humble Döner kebab evolved into Berlin’s go-to fast food snack

Why are Döners so expensive these days? 

Döner shop owners are facing a perfect storm right now, with much higher wage, energy, and food costs.

Speaking to Tagesschau, Ömer Gülec – who runs a kebab shop in Frankfurt am Main – said it was increasingly difficult to cover his costs by selling kebabs.

“If we wanted to sell the kebab to cover costs, we would have to raise the prices to at least nine euros,” he said. But that’s near impossible to do without alienating customers.

“For some customers, the döner kebab is a basic food that should not cost more than six euros,” explained Gülec.

That’s largely because food has become eye-wateringly expensive to buy, with data from the Federal Office of Statistics showing a 24.3 percent uptick in the price of cereal and bread products compared to last February. Meanwhile, vegetables cost around 20 percent more, and beef and veal have increased in price by around 18 percent. 

Another key factor was last September’s jump in the minimum wage, which is now set at €12 an hour, and the huge rise in energy costs. In every kebab shop around the country, the meat spit turns all day long, leaving owners with sky-high bills. 

Combine all three and it makes it near impossible to charge anything less than €6 – let alone €3. 

Which cities are the cheapest – and which are the priciest? 

Lieferando’s ‘Döner-Vergleich’ (Döner comparison) found pretty significant regional differences in how much people are charged for their kebab – but the study also shows that a Döner under €6 has become something of a rarity anywhere.

Dresden and Bremen kept their earlier titles as the more affordable places in the country to enjoy a kebab, with customers in Saxony’s capital paying an average of €6.40 and those in the northern city-state paying €6.17. But a glance at a previous Lieferando survey shows just how much prices have gone up in the past year. Back in 2022, the average price of a Döner in Bremen was just €4.67 and in Dresden it was €4.96.

Döner kebab prices in Berlin

A menu outside a kebab shop in the Berlin district of Prenzlauer Berg back in 2022. Photo: picture alliance/dpa | Fabian Sommer

On the other end of the spectrum, residents of Frankfurt am Main buy their kebabs from an average price of €7.80, and in pricey Munich, €7.98 is the new norm. That compares to a much more modest €5.47 in Frankfurt and €5.67 in Munich at the time of the last survey. 

And what about Berlin, the city that has arguably the strongest love affair with the kebab? Well, customers here also have to dig pretty deep in their pockets: they’re paying an average of €7.08 for a Döner, compared to around €5.40 last year.

READ ALSO: As supplier costs rise, are cheap kebabs a thing of the past in Germany?

Could €10 kebabs become the norm? 

When it comes to subjects that are likely to rile up the German population, few have quite the force that Döner prices do. 

Back in October, a video of Chancellor Olaf Scholz (SPD) being confronted by a furious Döner customer went viral online. 

The plight of the Döner has become such an emotive issue that there have been calls on social media platforms recently for a ‘Dönerpreisbremse’ – or Döner price cap – to follow on from the government’s energy price cap.

The pleas gained such momentum that they even elicited an official response from the government.

“With the energy price brakes, the federal government is also helping small entrepreneurs like the kebab trader,” they said. “Will it make kebabs cheaper? That can’t be said for sure yet.”

But according to Ömer Gülec in Frankfurt, the halcyon days of €3 kebabs are probably behind us for good.

“If the prices continue to rise so strongly for at least another six months, then the kebab prices will scratch the €10 mark everywhere,” he told Tagesschau.

Soon, a Döner for less than five euros could even be hard – if not impossible – to find.