FRANKFURT (Reuters) - German Finance Minister Christian Lindner is preparing personal income tax cuts worth 13 billion euros ($14.15 billion) until 2026, newspaper Bild cited government sources as saying on Wednesday.
Germany has a system of income tax rates that rise with income and the cuts are designed to offset the effect of "cold progression" whereby inflation leads to a higher average percentage of taxes over income, the paper reported.
Under Lindner's plan, the tax-free income allowance would rise in steps until 2026 and the level of income that triggers the highest tax rate would also be lifted.
The move could further limit the government's spending flexibility after the International Monetary Fund said last month that Germany needs to boost public investment and should consider easing its debt brake, which limits public deficits to 0.35% of gross domestic product.
The finance ministry did not immediately respond to a request for comment outside of business hours.
($1 = 0.9190 euros)
(Reporting by Ludwig Burger; Editing by Chris Reese)
