CSU Unveils Bold Tax and Labor Reforms to Boost Bavaria’s Economic Edge

Markus Söder’s ambitious plan could reshape Bavaria’s economy—lower taxes, flexible work rules, and a €10B funding twist. Will it work?

, and Administrator

2026 January 4 . 4:03 PM

2 min read

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CSU Demands: Lower Inheritance Tax - Abolish Phone-in Sick Leave - CSU Unveils Bold Tax and Labor Reforms to Boost Bavaria’s Economic Edge

The CSU has revealed a series of ambitious tax and labor reforms aimed at enhancing economic competitiveness and alleviating financial strain on citizens. Party leader Markus Söder, who was overwhelmingly re-elected in December 2025, is spearheading these proposals as part of a broader effort to fortify Bavaria's economic standing.

The plans encompass sweeping changes to inheritance, income, and corporate taxes, along with adjustments to working hour regulations and sick leave policies. These measures will be officially presented in a draft resolution at the party's retreat in Seeon Abbey this week.

At the core of the CSU's tax reforms is a push to increase the basic tax-free allowance for income tax. This move is intended to lessen the burden on low- and middle-income earners by allowing them to retain more of their earnings. The party also seeks to revamp inheritance tax, boosting exemptions and enabling businesses to be passed on entirely tax-free through inheritance or gifts. Additionally, the CSU advocates for regional variations in inheritance tax implementation, granting states more control.

On corporate taxation, Söder is advocating for accelerated reforms to make businesses more competitive. The party further proposes reducing the electricity tax for all citizens, asserting that this would lower living costs while stimulating economic activity. Funding for these changes, estimated at under €10 billion, could come from abolishing the contentious heating law, according to Söder.

The CSU's labor market proposals include replacing daily maximum working hours with a weekly limit. Party officials contend that this would afford employees greater flexibility and enhance work-life balance. Another contentious plan is the abolition of sick notes issued over the phone, which the CSU believes has contributed to a rise in unjustified absences.

Söder, who secured 83.6% support at the CSU's December 2025 congress in Munich, remains a dominant figure in the party. His leadership has centered on economic prowess while firmly opposing the far-right AfD. The impending retreat at Seeon Abbey will finalize the draft resolution, titled 'For a Competitive Economy', outlining the party's official stance on these issues.

The CSU's proposals signal a significant shift in tax and labor policy, targeting both businesses and individuals. If enacted, the reforms would reduce costs for workers, simplify inheritance rules, and grant companies more flexibility in managing hours. The party now confronts the challenge of translating these plans into legislation while securing the necessary funding.