Growth Booster 2025 - Effective Tax Investment Incentive

Structure

1. What is behind the immediate investment program?

2. Overview of the most important tax measures

3. For whom is the booster particularly worthwhile?

4. Temporal application window & deadlines

5. Conclusion with assessment and need for action

On June 26, 2025, the so-called “immediate investment program”, also known as the “growth booster”, was adopted by the Bundestag and published in the Federal Law Gazette on July 11, 2025 
The aim: to clear the investment backlog and create a tax framework that enables companies to quickly achieve liquidity benefits.

In this article, you will find out which measures the law provides for, for whom they are particularly attractive - and what you should pay attention to now from a tax perspective.

1. What is behind the immediate investment program?
The law for an immediate tax investment program was passed by the Bundestag on 26.06.2025 (BT-Drs. 21/323) and contains a large number of tax policy measures to reactivate the economy. 
The focus is on rapid depreciation, tax relief for company profits and incentives for research and electromobility.

The main target groups are SMEs, manufacturing companies and companies willing to invest with plans for the future.

2. An overview of the most important tax measures
The immediate investment program contains a large number of targeted tax incentives that are intended to provide companies with both short-term and long-term relief and promote investment. The focus is on accelerated depreciation, tax rate reductions and subsidies for research/development and electromobility. 
(The measures outlined below apply for specific periods and have different target groups and should therefore be carefully incorporated into strategic tax planning. We will be happy to help you with this).

• Degressive depreciation (Section 7 (2) EStG new version): For movable assets acquired or manufactured from 01.07.2025 to 31.12.2027, a declining balance depreciation of up to 30% per year can be claimed. 
  This means that a higher depreciation amount is applied in the first year, which immediately reduces the tax burden and can therefore increase liquidity. This regulation is particularly suitable for investments in machinery, technology or vehicle fleets.

• Special regulation for electric vehicles: A special depreciation model has been introduced for e-vehicles used for business purposes, which enables significantly higher tax relief in the first few years - e.g. around 75% depreciation in the first year. 
  This is particularly interesting for companies that want to modernize their vehicle fleet or make it more sustainable.

• Corporation tax reduction (Section 23 KStG-E): From 2028, the corporation tax rate will be gradually reduced from 15% to 10% - a significant competitive advantage for corporations that retain profits in the long term and keep them in the company.

• Tax relief on retained earnings (Section 34a EStG): Also applied to partnerships. The tax on profits that are not withdrawn is to be reduced in stages from 28.25% to 25% from 2028, provided the option to retain profits has been opted for. 
  This significantly increases the attractiveness of the use of profits in the company.

• Research allowance (Section 3 FZulG): The maximum subsidy amount will be increased from €10m to €12m from 2026. At the same time, small and medium-sized enterprises will benefit from an increased funding rate of up to 35%. Both in-house developments and cooperation projects with research institutions are eligible for funding, as well as part of the overheads.

3. For whom is the booster particularly worthwhile?
Companies that are planning major investments in the coming years and want to optimize their tax burden will benefit in particular from the measures of the immediate investment programme. The focus here is on manufacturing companies, technology-oriented companies and start-ups with a scalable business model. There are also tangible benefits for companies with a large fleet of vehicles or a high proportion of innovation.

Corporations will benefit in particular from the planned reduction in corporation tax and the lower taxation of retained earnings. This means that profits can be left in the company and used for further growth. In addition, SMEs and start-ups with a focus on R&D will receive new funding opportunities thanks to the extended research allowance.

The declining balance method of depreciation means that tax deductions can be made earlier, which not only promotes investments but also allows them to be timed in a way that makes business sense. This significantly increases flexibility in liquidity and investment planning.

4. Temporal application window & deadlines
The measures take effect in different time axes:

• Degressive depreciation: only for assets purchased between 01.07.2025 and 31.12.2027

• Special depreciation for e-vehicles: also only applies to acquisition (not leasing)

• Tax rate reduction (KSt + §34a): takes effect from 2028, and then annual reduction

• Research allowance: increased limits apply from 2026

Important: The application of depreciation is to be calculated pro rata temporis in 2025 (see BMF FAQs on the introduction, still pending).

5. Our Conclusion with assessment and need for action
The immediate investment program is a welcome tool for making planned investments attractive from a tax perspective. In particular, the combination of higher degressive depreciation and future tax cuts creates scope for strategic financial planning. The new research allowance is particularly worthwhile for innovative companies due to the increased limits and subsidy rates.
Are you considering bringing forward investments, retaining profits or switching to e-mobility? Then get in touch with us! Together, we will analyze how you can get the maximum potential out of the growth booster - in a legally compliant and economically sensible way.

We will be happy to support you.