Extension of the rate reduction for income from agriculture and forestry

The Bundestag and Bundesrat have created the legal requirements to continue the rate reduction for income from agriculture and forestry after 2022.

To mitigate income losses due to climate change, farmers and foresters are entitled to a reduction in income tax rates under certain conditions, which leads to progression smoothing within a three-year period. The last such three-year period ended in 2022. As the situation in agriculture and forestry has not improved, the rate reduction will be extended for two further three-year periods until the end of 2028.

A corresponding legal provision was initially included in the draft for the Annual Tax Act 2024, but was then transferred to a separate law in order to be able to implement the regulation more quickly. On September 27, the Bundesrat approved this "Act to extend the rate reduction for income from agriculture and forestry", which can now enter into force.