Coalition Committee in Berlin: Union and SPD struggle over major reform package
Berlin, June 30, 2026
Heinrich-Böll-Stiftung from Berlin, Deutschland / Wikimedia Commons / CC BY-SA 2.0
Summary
Ahead of the coalition committee meeting in the Chancellery, the Union and SPD have not yet resolved their differences on taxes, pensions, long-term care, and health. Finance Minister Lars Klingbeil is presenting two drafts for an income tax reform that will determine relief for low and middle incomes.
Berlin, June 30, 2026
The leaders of the Union and SPD are meeting on Wednesday at the Chancellery in Berlin for decisive deliberations on their reform package, which is to address tax relief, pensions, health, and long-term care.
The deliberations are taking place in the coalition committee and are considered the central domestic policy project of the black-red coalition. Government spokesperson Stefan Kornelius announced that the meeting should produce a large package encompassing taxes, labor, social affairs, bureaucracy reduction, and the modernization of the state. The goal is to get the economy back on track and to make the social security systems fit for the future.
The biggest item is considered to be the reform of income tax, for which Finance Minister Lars Klingbeil has put forward two proposals. The smaller draft envisages relief of just over ten billion euros, while the larger version has a volume of around 25 billion euros. According to the coalition agreement, relief should primarily go to people with gross monthly incomes between 2,500 and 3,000 euros; the first variant would deliver just over 800 euros per year according to calculations, the second roughly half that.
Income Tax Reform: Two Models on the Table
Within the SPD there are calls for higher burdens on top earners and large estates above an income of 100,000 euros. Five members of parliament, among them Annika Klose, who helped develop the Pension Commission's proposal, want to stand up against attacks on workers and are demanding a wealth levy as well as a fairer inheritance tax. SPD party chair Bärbel Bas cited a relief volume of 500 euros per year.
The Union rejects a higher top tax rate and higher burdens on large estates. CDU General Secretary Carsten Linnemann rejected a draft, and the employers' associations also rejected it categorically. At the same time, Linnemann signaled openness to raising the rich tax, which at one percentage point would bring in around an additional one billion euros.
Pensions, Long-Term Care, and Health: Much to Clarify
On pensions, a proposal from the Pension Commission is on the table, which the Union and SPD essentially want to implement one-to-one. An agreement on the precise timetable is expected by the end of the year. Federal Health Minister Nina Warken (CDU) warned that statutory health insurance could post a deficit of 19 billion euros next year, and around 44 billion euros by 2030.
The long-term care reform is also causing dispute: a draft presented in June by the Health Ministry envisages, among other things, lower pension contributions, higher hurdles for classification into a care grade, slower increases in subsidies for nursing home costs, and the abolition of the 100,000-euro threshold for children of parents in need of care. The draft met with sharp criticism from the federal states, the SPD and CSU, patient advocates, and the long-term care funds. The Bundestag is not expected to deal with the long-term care reform until autumn.
On labor law, a draft from the Labor Ministry under the leadership of Bärbel Bas had already leaked in mid-June, seeking to allow exceptions to the eight-hour day only via collective or works agreements and to make electronic time recording mandatory. In the coalition agreement, the Union and SPD have agreed to create the possibility of a weekly rather than a daily maximum working time.
Voices from the Union and SPD
From the CDU comes the suggestion that Markus Söder must forgo his mother-pension (Mütterrente), Lower Saxony's Minister-President Olaf Lies wants to see momentum on the reforms, but please no rush. CDU state chair Sebastian Lechner, by contrast, is demanding more time for the income tax reform, and Hendrik Wüst from North Rhine-Westphalia reminded everyone once again that the government's capacity to act is at stake.
SPD managing director Dirk Wiese said the coalition wants to cross the finish line on the key issues. It is also possible that the negotiations go into extra time. Whether decisions come on Wednesday or in the night to Thursday remains open. The Chancellor has given a commitment to the ZDF program maybrit illner for Thursday evening.
With regard to the revenue side, there is discussion of cutting VAT on food to zero percent; the current general rate is 19 percent. Raising the regular VAT rate by one percentage point would bring in an additional around 16 billion euros. Many bureaucratic requirements for businesses come from Brussels; the federal government is therefore also pushing for relief at the EU level.
Timeline and Possible Extension
The savings program for statutory health insurance is already in the parliamentary process, but there is still a need for clarification. The aim is to pass the health financing law in the Bundestag next week before the summer break. The coalition does not want to let itself be put under time pressure; Manuela Schwesig, Minister-President of Mecklenburg-Vorpommern, voiced concerns; state elections are due there in September.
The previous coalition summit at Villa Borsig ended without results. The coalition wants to underpin the reforms before the summer break, which begins in early July, with cabinet decisions on pensions; the necessary laws are to be drafted by the end of the year.
Members of the SPD's left wing demanded in a statement available to ZDFheute: wir brauchen Reformen, die das Leben der Menschen in schwierigen Zeiten besser machen.
The matter was reported by dpa-AFX.
Questions & Answers
What is the coalition committee meeting on June 30, 2026 about?
The leaders of the Union and SPD are meeting in the Chancellery to discuss tax relief for low and middle incomes, labor market reforms, and the issues of pensions, health, and long-term care. Government spokesperson Stefan Kornelius announced a large package that is also to include bureaucracy reduction and the modernization of the state.
What proposals has Finance Minister Lars Klingbeil put forward?
Lars Klingbeil has presented two drafts for the income tax reform: a smaller one with relief of just over ten billion euros and a larger one with around 25 billion euros. The relief is to benefit primarily people with gross monthly incomes between 2,500 and 3,000 euros.
By when are the reforms to be decided?
The coalition wants to finalize the reforms before the summer break in early July with cabinet decisions on pensions, with the necessary laws to be drafted by the end of the year. The Bundestag is not expected to deal with the long-term care reform until autumn.
Coalition Committee: Union and SPD ahead of reform crisis | allfacts360
