Starting in 2027, tax brackets will no longer be indexed to inflation. This means that “tax inflation” will return.
Many employees will find that their – usually modest – salary raises place them in a higher tax bracket. The increase in taxes paid, which in the case of wage earners are withheld at the source, is often larger than the increase in pay.
Employers, despite their wish to hold costs down, are aware that many of their salaried employees are worried about persistent inflation, which is especially strong in foodstuffs. That is why they propose giving their employees coupons to buy foodstuffs in supermarkets.
The government is not at all favorable to this: Give your employees higher raises so that their net income increases, officials tell the employers. The employers balk at this because salary raises would also include other labor costs, such as social security contributions.
