After approving the package of measures designed to “secure jobs by strengthening growth” several weeks ago, the German government has launched its second program to stimulate the German economy. Under this new package, a tax relief of EUR 2.9 billion will be granted in 2009 and starting in 2010, the income tax will be reduced by EUR 6.05 million.

These results will be achieved by the following measures:

· The basic income tax exemption will be increased by EUR 170 to EUR 7,834, retroactively to 1 January 2009.

· In 2010, the basic income tax allowance will again be increased to EUR 8,004.

· Additionally, in order to provide specific relief for low-income households; the initial income tax rate will be reduced from 15 % to 14 %.

Families and employees will be further relieved in 2009 by an increase in child benefits and the tax exemption for children plus a reinstatement of the commuter tax allowance starting from the first kilometer. In 2010, relief will be granted by allowing the deductibility of health and long-term-care insurance costs.